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ARCHIVE | Criteria | Structured Finance | Covered Bonds: FI Criteria Update: Rating Methodology For Spanish Covered Bonds Considers Enhanced Post-Insolvency Treatment Apr 05
Standard & Poors, April 2005
Abstract
Standard & Poor's Ratings Services has revised its rating approach for Spanish covered bonds, or 'c-dulas' ('c-dulas hipotecarias' and 'c-dulas territoriales'), following the significant enhancements to these instruments' post-insolvency treatment introduced by Spain's new Insolvency Law. The approach takes into account the Spanish legal and regulatory frameworks, issuer creditworthiness, and the assessment of collateral and underlying cash flows. Under the revised rating methodology, c-dulas may be rated up to five notches higher than an issuer's counterparty credit rating, based on their prospects for timely post-insolvency payment. Ratings on c-dulas may even reach 'AAA' in cases where the probability of c-dulas payment interruption in the event of issuer insolvency is extremely remote. The new bankruptcy code provides an adequate framework to...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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