CaixaBank issues €1bn in 5-year Spanish mortgage covered bonds, attracting demand in excess of €2.7bn

79% of the issue was taken up by international investors

• The issue price, 210 basis points over the midswap rate, was better than anticipated following strong response from capital markets.
• The issue, which was completed in less than an hour and a half, further strengthens CaixaBank's already excellent liquidity position, which as per 31 December 2012 stood at €53,092 million.

CaixaBank, Spain's leading bank, today successfully completed an issue of 5-year Spanish mortgage covered bonds (cédulas hipotecarias) worth €1bn, attracting demand in excess of €2.7bn.

The price of the issue, which was placed in less than an hour and a half, was established at 210 basis points over the midswap rate, the benchmark index for this kind of issue, which was below the initial price (220bp) thanks to strong demand. The coupon rate was 3%, while the issue cost meant that CaixaBank raised funding at a rate 42 basis points lower than Spanish government bond yields for the same term.

The issue is part of CaixaBank's 2013 financial plan, aimed at further improving the bank's already excellent liquidity position, which is central to the bank's strategy of financial prudence. At the close of 2012, CaixaBank had liquidity of €53,902 million, nearly all of which is immediately available, representing 15.2% of total assets.

In January CaixaBank, overseen by its CEO Juan María Nin, completed a €1bn issue of 3-year senior bonds, attracting demand of more than €5bn. Furthermore, at the close of 2012 CaixaBank had a strong solvency level, with a Core Capital ratio (BIS II) of 11%, following the merger with Banca Cívica.

CaixaBank took advantage of favourable market conditions to continue its program of institutional issues. CaixaBank's last issue of Spanish mortgage covered bonds came in February 2012, when it placed €1bn in 5-year securities at a price 248 points over the midswap rate. The new issue demonstrates the confidence that wholesale markets place in the bank and the value they see in its strengths.

This new issue was very well received by institutional investors, who placed 180 orders. There was particularly strong interest from international investors, again demonstrating how well CaixaBank is perceived abroad.

International investors take up 79% of the placement

79% of the issue was taken up by international investors, mainly from countries such as Germany, France and the United Kingdom, with a strong showing from investment and pension fund managers, central banks, insurance firms and private banks. The take-up among Spanish investors stood at 21%.

CaixaBank expects this Spanish mortgage covered bonds issue to be given long-term credit ratings from Moody's and Standard & Poor's of A3 and AA- respectively. The operation is considered a benchmark issue, meaning the securities will be tradable on the major global bond markets.

The underwriters of the issue were BNP Paribas, CaixaBank, Citi, Deutsche Bank and Société Générale.