While issuance of Spanish covered bonds has fallen over the past couple of years, the credit quality of these programs has been improving. 

That’s largely because the share of residential mortgages backing multi-issuer covered bonds is rising, according to Fitch Ratings. Residential loans have outperformed other assets in cover pools. At the close of the first quarter, these loans accounted for nearly 75% of the cover pools behind these transactions. That’s up from 58% at the close of Q1 2012.

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