Spain's Ministry of Economy recently granted an order that has made it easier for small medium-sized enterprises (SMEs) to gain access to the financial markets. In the wake of this order, Caixa Catalunya (CC) recently securitized EURO180.4 million worth of loans to SMEs.

A five-tranche collateralized loan obligation for EURO150 million - the first for the company was launched in the Spanish market, with J.P. Morgan Chase and Caixa Catalunya as deal managers.

The very tightly priced inaugural deal in Spain's CLO market was only preceded by the Volkswagen deal, VCL No. 4 Ltd., which stole some of the Spanish deal's fire. However, the deal was reported three times oversubscribed in several of the tranches. Two of the deal's five pieces are guaranteed by the Kingdom of Spain and are rated triple-A.

The majority of the bonds were scooped up by European banks and the guaranteed tranches were bought by banks seeking zero risk-weighted paper.

The CLO market seems to be an efficient vehicle for some Spanish banks, and according to Moody's Investors Service, the law that was recently passed will probably increase securitizations. Moody's says that it expects the Spanish CLO market to blossom this year, based on the announcement in 1999 that the Spanish Treasury will act as a monoline insurer for transactions backed by loans to Spanish SMEs, guaranteeing 50% of A-rated bonds and 80% of Aa-rated bonds.

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