DBRS Ratings Limited (DBRS) has published a commentary assessing the risk exposures of the
Spanish transactions it rates following increased tensions arising from Catalonia’s bid for
DBRS does not expect an immediate increase in arrears and losses from loans granted to borrowers in
Catalonia. In DBRS’s view, the uncertainty triggered by political events, if protracted, could weigh
on economic growth prospects in both Catalonia and Spain as a whole but will not result in an
immediate increase in unemployment or drop in asset values.
Compared with small and medium-sized enterprise or asset-backed security transactions, residential
mortgage-backed security transactions in particular are more exposed to a scenario of uncertainty
because of their longer weighted-average life. The senior notes in DBRS-rated Spanish transactions
should have sufficient credit enhancement in almost all transactions.
Covered bond transactions are further supported by the strength of the issuing banks, which DBRS
discusses in its commentary “Caixabank and Sabadell’s Office Moves Help Ease Investor and
Consequently, there should be no immediate impact on the performance of DBRS-rated Spanish