Spain

Activity in the euro government guaranteed bank debt market has picked up since Monday’s Swedbank issue, but only moderately. And despite an improvement in market sentiment, covered bond banks are keeping investors waiting for a follow-up to last week’s jumbo from Crédit Agricole.

The government guaranteed bank debt market was the juncture of two waves of negative sentiment in the markets this week, as downgrades hit the sovereign market and financial institutions suffered renewed pressure.

Moody’s yesterday (Monday) put the triple-A ratings of three series of multi-issuer cédulas on review for downgrade as a result of their exposure to Caja de Ahorros de Castilla-La Mancha (CCM) and the deterioration of the Spanish mortgage market.

HSH Nordbank today (Monday) opened books on a three year SoFFin-guaranteed benchmark deal at 0900 London time with guidance of 30bp over mid-swaps, which is where Commerzbank’s inaugural government-backed transaction was priced on Friday.

The Cover understands that the update to the Spanish covered bond framework will finally be completed early in the new year, with a Royal Decree expected in January.

Rating actions: Moody’s yesterday (Wednesday) upgraded the ratings of Banco Espanol de Credito’s cédulas hipotecarias from Aa1 to Aaa. Meanwhile S&P downgraded two cédulas issuers.

Rating action: Fitch today (Wednesday) downgraded Banco Guipuzcoano’s outstanding cédulas hipotecarias from AAA to AA+. The outstanding covered bonds amount to Eu1bn.

Rating action: Fitch yesterday (Tuesday) assigned a AAA expected rating to Caja Murcia’s Eu160m December 2011 issue of cédulas hipotecarias. The rating agency is still waiting for final documentation before finalising the rating.

Standard & Poor’s downgrade of Natixis from AA-/A-1+ to A+/A-1 at the end of October does not affect the ratings on the notes issued in six Spanish structured covered bond transactions where it is liquidity provider, the rating agency said on Wednesday.

Rating action: Moody’s on Friday placed on review for possible downgrade the Aaa rating of Caja de Burgos’s cédulas hipotecarias.

Fitch Ratings on Tuesday said that it is updating its criteria for rating multi-issuer cédulas hipotecarias transactions and will release its new version in the first quarter of next year.

Banco Guipuzcoano is issuing a Eu300m three year fixed rate cédulas hipotecarias, which is believed to be its first stand-alone covered bond.