Spanish Covered Bonds: On a New Path
On 8 July 2022, a new law governing all existing and new Spanish covered bonds (CBs) entered into force. This law transposes the European Commission’s CB Directive, which outlines the harmonisation of CB frameworks across Europe, into Spanish law and replaces all previous Spanish CB laws.Positive features of the law include:
-- Strict eligibility criteria for cover pools backing mortgage CB;
-- The appointment of a special administrator to manage the CB programme in case of an issuer’s insolvency or resolution;
-- The designation of an independent party to monitor the CP; and
-- The dynamic liquidity buffer to cover temporary liquidity constraints, which the CP shall include at all times.
These positive features have a credit-positive effect on the Spanish CB programmes, resulting in upgrades to two Spanish CB programmes and confirmations of the existing AAA ratings for the other three programmes rated by DBRS Morningstar.
DBRS Morningstar is a global credit ratings business with 700 employees in eight offices globally. DBRS and Morningstar Credit Ratings are committed to empowering investor success, serving the market through leading-edge technology and raising the bar for the industry.
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