While Spanish banks have launched a stream of guaranteed issues, Dresdner Kleinwort analysts said, those hoping for this to signal a sufficient buying interest in Spanish names, which would potentially also help the Cedulas (covered bond) market stage a revival, are likely to be disappointed.

Six Spanish state-guaranteed bank bonds have come to the market within the past three weeks. Former issuers (Caja Madrid, Popular, Bankinter, Pastor and Caixa Catalunya) all opted not only for the maximum three-year maturity allowed for guaranteed paper but also for a pricing within the same spread range of 75 basis points to 85 basis points over swaps.  

Analysts, however, said that established Cedulas buyers are probably still sitting on fairly large holdings, with poor secondary market liquidity preventing a reduction in books or switching.

"A look at the placement statistics also reveals that even for guaranteed issues, the interest of international real money investors has melted down again: Some 70% of Caixa Catalunya's issue, for example, were placed in Spain whereas German buyers, who are traditionally the most important investor group in the covered bond segment, still stuck to the sidelines," Dresdner analysts said. "Furthermore, the high share of banks in the books of some issuers could indicate that supportive buying by the lead managers was necessary in some cases." 

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