...This report compares the Spanish covered bond programmes (CTdulas) rated by Fitch, secured either by mortgages (CTdulas Hipotecarias, CH) or by public-sector loans (CTdulas Territoriales, CT). The CTdulas market is the world's fourth largest with almost EUR300bn of bonds outstanding. They are issued under an integrated template, with cover assets remaining on the issuer's balance sheet. CTdulas have a hard-bullet amortisation profile and bondholders are protected by minimum legal overcollateralisation (OC) levels that are much higher than any other jurisdiction with a minimum OC of 25% for CH and 42.8% for CT. Low Risk of Undercollateralisation: All Spanish CTdulas rated by Fitch enjoy a two-notch Issuer Default Rating (IDR) uplift, recognising the advanced framework under which CTdulas are exempt from bail-in under a bank resolution scenario and Fitch's assessment of the low risk of undercollateralisation. Law 11/2015 transposed the EU's Bank Recovery and Resolution Directive (BRRD) into...
