The Standard & Poor’s downgrades of leading Spanish banks earlier this week could reverberate on outstanding ABS deals, the agency said.
There are two ways the banks’ lower creditworthiness can contaminate these transactions — as issuers of covered bonds and as counterparties in ABS.
Earlier this week, S&P dunked the ratings of 15 Spanish banks, not least among them such globally recognizable names as Banco Santander and Banco Bilbao Vizcaya Argentaria (BBVA), which saw their long-term counterparty credit ratings tick down to ‘AA-’ from ‘AA.’ Both Santander and BBVA are major securitization players.
“Potential future rating actions on existing affected securitizations will depend on whether counterparties take any remedial action, such as replacing themselves, obtaining an appropriately rated guarantor, or prefunding obligations,” said the agency.
