Bankinter Offers Record Covered Bond Spread After Almost Failing EU Tests
Bankinter SA, the Spanish lender that almost failed the European Union bank stress tests, offered a record-high spread to sell covered bonds.
The lender added 400 million euros ($518 million) to its 2.625 percent mortgage-backed bonds due April 2013 at a spread of 240 basis points more than the benchmark swap rate, according to data compiled by Bloomberg. That compares with a spread of 195 basis points paid by Banco Bilbao Vizcaya Argentaria SA to sell 2 billion euros of three-year covered bonds on July 19, according to data compiled by Bloomberg.
The EU revealed that in stressed economic conditions Madrid-based Bankinter would have a so-called Tier 1 capital ratio of 6.8 percent, just above the 6 percent pass mark. The lender’s Finance Director David Perez Renovales told Bloomberg Television today that the bank has sufficient capital.
“Investors are still extremely negative on Spanish lenders,” said Florian Hillenbrand, a Munich-based analyst at UniCredit. “The spread offered implies that investors are not giving any worth to the pool of mortgages backing the deal.”
A spokesman for Bankinter, who declined to be identified, said “it is very far from our opinion” that the lender almost failed the stress tests, and that the result was satisfactory. Barclays Capital and Natixis are helping to manage the sale.
The issue that Bankinter tapped was for 1 billion euros of three-year covered notes priced at a spread of 85 basis points more than the swap rate on March 25, Bloomberg data show. Covered bonds use mortgages or public-sector loans to guarantee payments and can help lenders reduce borrowing costs.
Bankinter rose 0.16 percent to 5.58 euros at 4:20 p.m. in Madrid.
To contact the reporters on this story: Esteban Duarte in Madrid at eduarterubia@bloomberg.net;
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