Spain Banks Face Debt Challenge as ECB Cuts Cash, Moody’s Says
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Spanish banks may struggle to refinance covered bonds as the European Central Bank’s plan to reduce liquidity supports forces lenders to tap debt markets at record-high yield spreads, Moody’s Investors Service said.
The higher cost of refinancing is a “credit negative development” for covered bond issuers, “especially if the ECB pulls back its support,” Moody’s analyst Tomas Rodriguez-Vigil Junco wrote in a report today. Spanish lenders have about 70 billion euros ($96 billion) of covered bonds coming due in the next two years, the analysts wrote.