Spain

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.

Spain has put itself firmly back on the covered bond map in the last fortnight, with large but contrasting issues from Banco de Sabadell and La Caixa. Analysts are firm on which of the two lights the way for the cédulas market, even if the supply outlook for the country is still unclear.

Banco de Sabadell’s leads were today (Wednesday) hoping that despite setting a new high of 53bp over mid-swaps, the Eu1.25bn two year jumbo could mark a turning point for the covered bond market, which has been subject to progressively wider primary market levels.

Banco Sabadell is set to price the first cédulas hipotecarias jumbo for more than five months today (Tuesday), a Eu1.25bn two year issue, having attracted orders of more than Eu2.5bn. Investors breathed a sigh of relief as secondary spreads withstood the new issue, even if Sabadell’s peers were digesting the new levels being demanded for cédulas.

La Caixa was able to size its three year puttable cédulas hipotecarias at Eu1.5bn this (Friday) morning, larger than any of the jumbo covered bonds that were launched this week.