Italy’s Etruria, Santander Pull Asset-Backed Bonds Amid Crisis

Banco Santander SA (SAN)’s German consumer-finance unit and Italy’s Banca Popolare dell’Etruria e del Lazio (PEL) pulled asset-backed bond sales as the euro-region crisis roiled markets.

Santander Consumer Bank AG delayed an issue of 573 million euros ($802 million) of top-rated bonds backed by German car loans because of volatile markets, according to a banker involved in the deal. Arrezo, Italy-based Banca Etruria said it pulled a sale of bonds backed by 466 million euros of residential mortgages and that it’s keeping the notes itself.

A Madrid-based spokeswoman at Santander, who declined to be identified citing bank policy, wouldn’t comment.

Santander and Banca Etruria halted the deals as the sovereign debt crisis spread beyond Greece to infect Italy and Spain, sending yields on the nations’ 10-year bonds to euro-era highs earlier today. European Union finance ministers resumed meetings in an attempt to concoct a response to the bank stress tests due to be published later this week.

Santander was offering the notes, to be issued through SC Germany Auto 2011-1, at a yield of about 85 basis points more than the euro interbank offered rate, or Euribor, two people with knowledge of the deal said yesterday. Banca Etruria had been planning to meet investors this week for its Mecenate Srl issue, before deciding to pull the transaction in the hope of selling the notes on in the future.

Santander’s issue was being managed by the subsidiary’s investment banking arm together with Natixis and WestLB AG, while Etruria’s deal was led by Credit Suisse Group AG and UBS AG.

Italian 10-year bond yields rose above 6 percent for the first time since 1997 today, before the notes rallied, while Spanish yields surged to a record 6.31 percent and then fell back.

To contact the reporter on this story: Esteban Duarte in Madrid at eduarterubia@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net

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