not the happiest of reading for spainish buyers
The UK Telegraph newspaper reported yesterday that “Spanish banks are issuing mortgage securities and asset-backed bonds on a massive scale to park at the European Central Bank, using them as collateral to raise money at favourable rates from the official credit window in Frankfurt.” Since the private market has basically been closed since Sept, the only thing keeping the Spanish mortgage sector from going the way of the UK and US is what amounts to a “covert rescue” by the ECB. The article says it could be
bigger, proportionately, than the Northern Rock affair. The article cites data from Moody's, which says Spanish bank issuance of mortgage-collateralized paper last year reached €62 billion and €53 billion in Q4 alone. “Among those issuing mortgage securities in the last two months are BBVA (€4.9bn),
Caja Madrid (€2.4bn), Caja Catalunya (€1.6bn), CAM (€1.4bn), and Caja Castilla la Mancha (€800m).”
Spain may be avoiding a housing crash only by access to the ECB’s repo window. In addition, the Spanish corporate sector is overlevergaged—analysts say “Spanish corporate debt is now 112% of GDP. The current account.
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