Tag: mortgage bond

Sabadell Places €1,000M In 10-Year Mortgage Bonds

20 April 2017 – Expansión

It has taken Sabadell just four months to debut on the debt market this year. Yesterday, it completed the placement of €1,000 million in mortgage bonds with a maturity of 10 years, to leave Popular as the only entity that, given the uncertainty surrounding its specific situation, has not resorted to the capital markets to raise finance or secure resources for its capital buffer.

For these bonds, Sabadell is offering a coupon of 1%, in other words, 33 basis points above the mid-swap rate, the reference rate for issuances of fixed income securities in euros. The mortgage bonds are the safest debt that an entity can issue, given that, in Spain, they are guaranteed by all of the mortgage loans of the issuing bank, which serve as collateral in the event of bankruptcy. There has never been a default of this kind in Spain.

To carry out the operation, Sabadell has received help from Barclays, Commerzbank, Crédit Agricole, Lloyds and Natixis, as well as from its own investment banking team. Demand for the bond issue amounted to €2,400 million, in other words, more than twice the amount awarded.

Santander Totta

Meanwhile, Santander Totta, the Portuguese subsidiary of Santander, launched an order yesterday to place 7- and 10-year mortgage bonds. According to sources in the market, the operation will close tomorrow and will serve to raise cheap financing. Besides Santander, the following entities are participating in that operation: Unicredit, Deutsche Bank and Société Générale.

Original story: Expansión (by A. Stumpf)

Translation: Carmel Drake

BBVA Issues 5.5-Year Bonds Worth €1,250M

11 November 2015 – El Economista

Yesterday, BBVA completed the placement of mortgage bonds amounting to €1,250 million, with a five and a half year term, on which it will pay interest of 0.625%, the lowest coupon in the bank’s history for this kind of debt.

According to market sources, the strong demand from overseas investors allowed the bank to lower the price of the issue to 38 basis points above the midswap rate, the reference rate for this kind of issue.

The underwriting banks for the operation were BBVA itself, plus Commerzbank, Credit Agricole, HSBC and Natixis. The last time that BBVA carried out an operation of this kind was on 12 January 2015, when it also placed €1,250 million in mortgage bonds, although they had a 7-year term.

On that occasion, the entity paid interest of 0.75%, the lowest coupon on that kind of debt at that time, thanks to the fact that the operation attracted investors from all over the world, whose demand exceeded €2,500 million.

Following in the footsteps of CaixaBank

BBVA has launched this bond issue just one week after CaixaBank closed its own operation to issue 5-year mortgage bonds amounting to €1,000 million. Demand in that case almost doubled supply.

The price of that issue, which was closed on 4 November, amounted to 43 basis points above the midswap rate, and the bonds carry a coupon of 0.625%.

Original story: El Economista

Translation: Carmel Drake

Sabadell Places €750M 5-Yr Debt Issue At 0.475%

1 June 2015 – Expansión

€750 million debt issue / The bank has placed an issue of 5-year mortgage bonds with a record low yield of 0.475%.

For many financial institutions, the excess liquidity in the market is offsetting the recent increase in volatility that has resulted from the lack of agreement between Brussels and Greece. As a result, debt issues are proving successful.

Friday’s operation by Sabadell is a good example. Just 24 hours after the bank held its AGM, it went to the market in search of financing through the issue of 5-year mortgage bonds, arranged by Barclays, Deutsche Bank, HSBC and Lloyds. It paid a yield of 0.475%, which represents the lowest ever interest rate on a bond issue. Moreover, spreads, or differentials, are returning to pre-crisis levels, given that this yield sits just 12 basis points above the mid-swap rate (the reference rate for fixed rate issues).

“The primary international investors have all taken part in this operation and the participation rate in Germany has been particularly noteworthy. The main investors participating in the issue have been financial institutions, central banks, investment fund managers, insurance companies and pension funds”, said the entity in a statement on Friday.

Balance sheet

Sabadell has been particularly active in the market for this type of issue. Since November last year, it has completed four such transactions, raising €3,100 million in total. “The solvency of Banco Sabadell and its reputation on the international financial markets have undoubtedly been the factors that have contributed to the success of this placement”, it added. The bank wants to take advantage of the decreasing financing costs caused by the recent stimulus measures put in place by the European Central Bank (ECB). “The release of this issue will take place on 10 June and its launch forms part of Banco Sabadell’s non-equity security program, filed with the CNMV”, explain sources at the bank.

In September last year, the financial institution launched a covered bond (the term used for bonds in Europe) purchase program. In total, it has acquired €82,805 million. Moreover, it put in place a securitisation purchase program at the end of last year, and as a result it will close the first transaction involving Spanish mortgages since 2007, with UCI, which is owned by Santander and BNP Paribas. And in March this year, it started to purchase government debt, which has significantly reduced its financing costs.

Improved credit

As a result, credit is being revived once more, which is the main objective of the ECB. In this regard, Josep Oliu, Chairman of Sabadell (pictured above), said at the entity’s AGM last Thursday, that the strong level of competition in the financial markets to secure credit in the context of excess liquidity, represents a threat to the recovery of the banks’ financial results.

Original story: Expansión (by D. Badía)

Translation: Carmel Drake

Cajamar Places €750m 7-year Mortgage Bond Issue

16 January 2015 – Expansión

Cajamar Caja Rural has placed an issue of seven-year mortgage bonds amounting to €750 million, maturing on 26 January 2022, according to a statement released by the entity, which reveals that the orders received for the issue have exceeded €1,200 million.

The placement price of the issue – whose initial aim exceeded €500 million – has been set at 90 basis points above the mid-swap, to give a fixed annual coupon of 1.25% and a yield for the investor of 1.359%.

The high demand for this placement, at both a national and international level, indicates the support that institutional investors are showing for the financial activity of Spanish cooperative banks, led by the Cajamar Cooperative Group, according to reports by the bank.

The underwriters of this issue are BBVA, Crédit Agricole, Barclays and SOCGEN.

Original story: Expansión

Translation: Carmel Drake