DBRS Assigns Ratings to Banco Popular Espanol SA Cedulas Hipotecarias Tap Issuance

DBRS Ratings Limited (DBRS) has today assigned a rating of ‘A’ to a tap issuance of the existing covered bond “Cedulas Hipotecarias 2012-1 (ES0413790173)” issued by Banco Popular Espanol SA (BPE). The tap issuance is a EUR400mln fixed rate security maturing in March 2017. At the same time, DBRS has confirmed the ‘A’ rating on all other outstanding Cedulas Hipotecarias (CH).

The rating reflects the following analytical considerations:
• The senior unsecured debt rating of BPE (the “Issuer”) of A(low) with Negative Trend.
• The credit quality of the collateral cover pool and the substantial support of the cover pool in case of the default of BPE.
• BPE’s capabilities with respect to origination of the cover assets and servicing of the cover pool.

According to DBRS “Rating European Covered Bonds” methodology, the rating of the Covered Bonds, although linked to that of the Issuer, can be one notch above the Issuer’s rating in instances where DBRS Legal and Structuring Framework (LSF) matrices cannot be applied or their application would otherwise result in the covered bonds being rated at the same level as the Issuer.

A downgrade of the Issuer would lead to a downgrade of the CH by an equal number of notches.

Following this tap issuance and the partial amortization of EUR400mln CH this week, the total outstanding amount of CH is EUR25.738bn while the aggregate balance of mortgages in the cover pool is EUR60.884 resulting in a Nominal Over-collateralisation (OC) of 136.6%.

Notes:
All figures are in Euro unless otherwise noted.

The principal methodologies applicable are:
• Rating European Covered Bonds
• Global Methodology for Rating Banks & Banking Organisations
• Legal Criteria for European Structured Finance Transactions
• Master European Residential Mortgage-Backed Securities Rating Methodology
• Master European Granular Corporate Securitisations (SME CLOs)
• Master European Structured Finance Surveillance Methodology
• Operational Risk Assessment for European Structured Finance Servicers
• Unified Interest Rate Model Methodology for European Securitisations

These can be found on dbrs.com under Methodologies. For a more detailed discussion of sovereign risk impact on Structured Finance ratings, please refer to DBRS commentary “The Effect of Sovereign Risk on Securitisations in the Euro Area”.

The sources of information used for this rating include data related to the cover pool provided by BPE. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality.

This is the first DBRS rating on this financial instrument.

This is a newly created financial instrument.

For additional information on this rating, please see the related linking document.

Ratings assigned by DBRS Ratings Limited are subject to EU regulations only.

Initial Lead Analyst: Vito Natale
Initial Rating Date: 24 April 2013
Rating Committee Chair: Claire Mezzanotte

Lead Analyst: Vito Natale
Most Recent Rating Date: 23 May 2013
Rating Committee Chair: Claire Mezzanotte