Spain

Caja de Ahorros del Mediterráneo looked to be taking the record covered bond benchmark spread 7bp wider this (Friday) morning with guidance of 80bp over mid-swaps for a two year cédulas just two days after Banco Pastor priced its Eu1bn two year at 73bp over. But while the pricing was seen as necessary for the deal to get done, it caused dismay in the wider market where other potential issuers have been finding soft-sounding frustrating.

Spain’s Banco Pastor successfully priced a new Eu1bn two year cédulas hipotecarias at the widest ever level for a publicly offered covered bond, with one lead manager saying this was simply the level investors would buy at, and that market volatility meant that even comparing new issues to bonds launched as recently as May was fruitless.

An unlikely candidate reopened the covered bond market this (Wednesday) morning, with Banco Pastor opening books on a two year cédulas hipotecarias with price guidance that made it the widest ever publicly offered covered bond.

In brief: Spains’s Cajamar has mandated banks for its inaugural euro cédulas hipotecarias.

The update to Spain’s cédulas framework is drawing to a close, with the final draft of the Bank of Spain secondary regulations expected to be circulated in the coming weeks, after concerns were raised about the initial draft.

Caixa Galicia continued the burst of Spanish issuance when it priced its new Eu500m two year cédulas yesterday (Wednesday) afternoon, but the deal only just crept over the minimum sizes set by the leads. Market participants warned that the decreasing enthusiasm for Spanish deals was demonstrated by the declining trend in order books over the last fortnight.

Caixa Galicia opened books on a new cédulas this (Wednesdy) morning, and followed in Bankcaja’s lead in targeting a size of Eu500m-Eu1bn. As expected, the price guidance selected also puts it in the same space as Bancaja and Caixa Catalunya, rather than the tighter BankInter’s range, as clear tiers emerge in the Spanish primary market.

A new issue from Banco Santander Totta as early as tomorrow (Tuesday), after today’s continental European holiday, could provide further clues as to whether the widening trend in the primary market evident since last September has finally come to an end.

Caixa Catalunya showed the Spanish market to be in rude health today (Thursday) despite launching the fourth two year deal from the country in just over a week, attracting more than Eu2.5bn of demand from some 90 accounts to put together a Eu1.75bn transaction – the largest cédulas hipotecarias since the crisis began last summer.

Bancaja came hot on the heels of BankInter yesterday (Tuesday) afternoon to price a new Eu1bn two year cédulas at 65bp over mid-swaps. The issuer declared itself pleased to have launched its first benchmark deal so soon after the market’s reopening. Despite concerns over execution, the leads said worries over the order book and an apparent lack of coordination with BankInter were refuted by the successful pricing of both deals.

BankInter continued the revival in the cédulas market yesterday (Tuesday) afternoon when it priced a Eu1.5bn two year new issue at 52bp over mid-swaps, despite a deal at almost the same time from Bancaja. Meanwhile, market participants were already lining up the next cédulas issuer.

Following the reopening of the cédulas market by Sabadell last week Spain’s BankInter has closed the books on a Eu1.5bn two year at 52bp over mid-swaps and Bancaja has set its sights on a smaller deal at wider pricing. Despite the burst of supply and apparent lack of co-ordination among the issuers, the sector is holding up and indeed offering encouragement to the wider market.