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Caixa Catalunya plans to step up its origination of loans eligible for cedulas hipotecarias to take advantage of the attractive rates at which it can fund the assets in the covered bond market.
Spain's fourth largest savings bank will enter the market with its first standalone deal later this month, launching a Eu1.5bn-Eu1.75bn 10 year cedulas hipotecarias issue via Barclays Capital, HSBC, HVB and Ixis CIB.
Caixa Catalunya has been a regular issuer of residential mortgage backed securities (RMBS), but has only raised Eu700m in the cedulas market so far, by participating in two multi-issuer deals, Cedulas TdA 2 in 2003 and AyT VIII in 2004.
This is partly because most of the bank's mortgages are ineligible as collateral for cedulas: flexible mortgages, loans to developers, and commercial mortgages.
Caixa Catalunya's mortgage portfolio is around Eu18.7bn. Its first issue will have total overcollateralisation of more than 700% but the overcollateralisation by eligible mortgages will be around 200%.
However, Ferran Sicart, head of treasury and capital markets at Caixa Catalunya in Barcelona, told EuroWeek that the bank would be generating more assets as cover for cedulas and would issue a benchmark every year.
"We have refocused our commercial strategy to increase the proportion of mortgages eligible for cedulas because we have realised that the conditions in the market are quite attractive...