Spain

The execution of the Eu1.05bn two year IM Cédulas 12 issue has shown that while the cédulas market is open, it is barely ajar. When the books were closed yesterday (Tuesday) afternoon the deal was only just oversubscribed, and Ahorro Corporación Financiera remains undecided over whether or not to tap the market next week with a Eu1bn-Eu1.5bn three to five year AyT Cédulas Cajas issue.

Bookbuilding for IM Cédulas’s Eu1.05bn two year multi-issuer deal got off to a steady start this morning, with its Eu500m of demand in the first two hours reflecting the measured pace of the five year Santander trade that reopened the cédulas market two weeks ago.

The growing importance of the cédulas market to Spanish banks in light of the dislocations in the asset backed securities market has been underlined by BankInter’s announcement that it will be launching its first cédulas hipotecarias. The bank has been one of the leading exponents of securitisation in Spain.

The maturity of IM Cédulas XII has been fixed at two years and Barclays Capital, Commerzbank, LBBW and Natixis are expected to launch the deal in the coming days. Other issuers, however, are said to be holding off from confirming mandates given the redoubling of risk aversion in the market.

Ahorro Corporación Financiera is testing the water for a possible Eu1bn-Eu1.5bn three to five year AyT Cédulas Cajas issue for launch in the week of November 19, having mandated Danske Bank, Dresdner Kleinwort, DZ Bank, Merrill Lynch and Société Générale to sound out the market today (Wednesday).

Santander has successfully executed the first public Spanish covered bond since the liquidity and credit crisis struck, a Eu1.5bn five year deal that allayed fears that spreads in the cédulas market could widen in the face of new issuance.

Santander appeared to have pitched its five year cédulas hipotecarias - the first since the market closed in August - at the right spread guidance this morning, with investors responding favourably to the 13bp over mid-swaps area talk.

Panellists at the Euromoney Spanish Capital Markets Forum in Madrid said yesterday (Wednesday) that the credit and liquidity crises of this year would not simply widen spreads, but reconfigure the use of securitisation and covered bonds.

As leading issuers meet today (Wednesday) at the Euromoney Spanish Capital Markets Forum in Madrid, The Cover examines the dynamics that have frustrated the ambitions of the cédulas market in 2007, and what can be done to reposition the sector.

The launch of the first Spanish covered bond since before the summer got closer today (Tuesday) with the announcement that Barclays Capital, Commerzbank, LBBW and Natixis have been mandated for IM Cédulas 11, which will be a short dated benchmark issue and is due in mid-November. Crédit Mutuel-CIC of France has also mandated a new issue.

Fitch Ratings delivered an optimistic assessment of the performance of the leading Portugese banks in the first half of 2007. The report, published on Friday, expects the banks to maintain this strong performance despite recent difficult market conditions.

Luis Sánchez-Guerra, deputy general manager at Ahorro Corporación Financiera, has confirmed that a Eu2.95bn two year floating rate note launched off the AyT Cédulas Cajas Global programme yesterday (Thursday) has been retained for liquidity purposes.