Spain

Caixabank has become the fourth Spanish bank to tap the covered bond market this year with its largest Cédulas in five years. That four borrowers have launched similar sized deals of around €1.5bn so far this year suggests volatile market conditions are causing banks to frontload their funding.

Last year the Markit iBoxx Euro Banks index was one of the outperforming bond sectors in Europe having returned 1%. The index, which is largely made up of bonds issued by European banks, even managed to outperform defensive sectors such as healthcare and utilities, while Europe’s regulatory oversight and relaxed monetary conditions kept market confidence in check.

Catalonia’s new pro-independence government wants to negotiate with Madrid on the basis that it will take on 11% of the Spanish national debt, GlobalCapital can reveal. That would raise Spain’s debt-to-GDP ratio at a stroke from 99% to 111%, write Victor Jimenez and Craig McGlashan.

Earnings at Santander matched market expectations, but analysts argued that fully provisioning losses on its Abengoa exposures would have taken the bank to a fourth quarter loss.

Established covered bond investors are often sceptical about conditional pass through deals. The structure allows the maturity of their investments to be extended, perhaps by decades. But they could be safer than long dated bullet deals.

Spanish low cost airline Volotea has decided to postpone its initial public offering in Madrid, making it the first ECM victim of this year’s heightened market volatility.

The opening shot for the race to save Abengoa from bankruptcy came on Monday from Alvarez & Marsal, the restructuring firm, and its plan to half the Spanish renewable energy company’s corporate debt to €4bn ­— now the board and creditors must approve the scheme before March 28.

As WTI and Brent crude oil prices slip down below $30, high yield analysts are pointing at Spain’s oil producer Repsol as the first European company that could cross over into the sub-investment grade market.

Southern European lenders are back on the defensive as a European Central Bank inspection of non-performing loans drives a pronounced sell-off in equities and subordinated debt.

As Abengoa approaches its late March deadline to avoid bankruptcy, this week the Bank of Spain began a round of checks on creditor banks’ compulsory capital provisions.

Spanish low cost airline Volotea has declared its intention to float in Madrid, with one lead banker saying the oil price fall could help the deal succeed.

Abengoa provided the first credit event auction of the year on Thursday and settled at a low price, after ISDA’s DC reached a split vote decision in December on the Spanish renewable energy company triggering a failure to pay trigger for 2014 credit default swap transactions.