The volume of mortgage securities rose 42% in 2020, to 42,594 million

MADRID, 26 One. (EUROPA PRESS) –

The volume of mortgage securities issued and admitted to trading amounted to 42,594 million euros in 2020, an increase of around 42% over the previous year, according to data provided by AIAF, the Fixed Income market, compiled by the Spanish Mortgage Association ( AHE).

This increase occurred despite the improvement in financing conditions through very long-term refinancing operations (TLTRO III) at negative interest rates, which have lowered liquidity needs.

However, contrary to what happened in 2019, mortgage bonds have not been the vector that has promoted this growth during the last year.

In fact, its issued volume amounted to 23,408 million euros, around 20% less than the volume issued during the previous year, when this same resource experienced an increase close to 50%.

MORTGAGE SECURITIZATIONS, IN 2016 MAXIMUM

In any case, it is observed that while in the first half of the year this instrument showed great dynamism, as the second half of 2020 progressed, the issuance of covered bonds stabilized in favor of mortgage securitizations which, after several years with hardly any register emissions, showed a remarkable growth.

Specifically, securitisations on mortgage-backed assets have gone from registering an issued balance of about 725 million euros in all of 2019 to representing 19,186 million euros in 2020, a figure that had not been reached since 2016.

In total, the evolution of outstanding balances for these two concepts (mortgage bonds plus mortgage securitization bonds) resulted in a year-on-year increase of 3.1% at the end of the year, reaching a balance of 321,070 million euros.

Despite the fact that the placement of single mortgage bonds registered a negative balance during 2020, the outstanding balance of these securities rose to 199,449 million euros, 1.9% more than with respect to the balance recorded at the end of 2019, although moderating its rate of advance since the middle of the year.

Meanwhile, multi-transferor bonds, an instrument used by the old savings banks due to their smaller size, continue to decline (-11% in December 2020) with a balance pending amortization of 22,220 million euros.

Altogether, the sum of both types of cédulas registered a balance of 221,669 million euros, that is, a slight increase of 0.5%. These instruments would be financing around 35% of the mortgage portfolio, one of the highest ratios in Europe.

For its part, the outstanding portfolio of securitized mortgage assets shows a favorable evolution, with a total balance of 99,401 million euros, which represents a net growth of around 9,300 million euros and an increase, in relative terms, of 9 , 6% compared to the previous year.

The AHE highlights that the reactivation that seems to accompany the securitization market in this last part of the year could be understood within the current situation in which the ECB would have lowered the requirements to admit this resource as collateral.

In addition, the European body is being less demanding compared to mortgage bonds by not requiring Spanish regulations to provide the eligible portfolio with loans that operate with financing below 80%.

NEEDS RISE IN TERRITORIAL ADMINISTRATIONS

On the other hand, it is worth highlighting the increase observed in the volume issued and admitted to trading of the territorial bonds, in line with the greater financing needs of the administrations of this range.

In absolute values, the issued balance increased by some 5,850 million euros throughout 2020, to the accumulated 9,150 million euros, although in net terms the balance did not reflect this increase as a result of debt maturities.

Along these lines, the balance of outstanding issues fell from the 20,762 million euros observed at the end of 2019, to the 18,262 million euros registered in 2020, a 12% year-on-year drop.

NEW REGULATION ON GUARANTEED BONDS

At the end of 2019, a directive of the European Parliament and of the Council on the issuance and public supervision of covered bonds was published, which seeks to harmonize the legislative frameworks of the different European jurisdictions, for a greater integration of capital markets.

In March 2020, the General Directorate of the Treasury of Spain opened a public consultation period on some of the key aspects of this new legislation.

The competent authorities are working on the Draft Law, which will be submitted to a public hearing in the first quarter of this year, for the future transposition into our legal system, initially planned for the middle of this new year. The AHE believes it will be delayed beyond the middle of 2021.

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