Spain’s Royal Decree Law 20/2012, which became effective on July 14, allows covered bonds to be backed by loans that finance export as well the as international expansion of Spanish firms. The new law offers further proof that the country’s banks have much fewer options in terms of traditional assets to support these bonds.

This is good news for Spanish banks since they have been finding it harder to access the capital markets. Issuing covered bonds allows them to maximize the European Central Bank’s (ECB) low-cost of funding.

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