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Capital Markets

Structured credit market round-up

Spanish borrowers pay fees shock

According to structured finance bankers, Iberian borrowers are changing long-held issuance strategies. For years Spanish and Portuguese banks have demanded that their leads underwrite new issues for no fees – in fact some, such as Santander, have built a business model on demanding payment for the privilege of bestowing mandates. However, this is changing and the current talk is that some are determined to pay fees (only two to five cents) having realized that it's a better way to secure good service. Although Spain's Bancaja has recognized this dynamic for some time, a number of SME issuers have also come to appreciate this. BCP, BPI and BES from Portugal are also said to be paying fees.

Rumour mill

A number of value-in-force, sometimes known as embedded value, securitizations are expected by the final quarter of 2005. In fact at least three deals are in the works although there could be more. These asset-backed deals are highly complex transactions executed on behalf of insurance companies as a means of freeing up capital. Such transactions are highly efficient, counting as tier 1 with the UK regulator, although other, continental, European insurers are looking at the tool.

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