TEXT-S&P reclassifies spanish covered bonds to Category 2

Thu Nov 29, 2012 12:31pm EST

OVERVIEW
     -- Following our recent downgrade of Spain and our Nov. 23, 2012 rating 
actions on Spanish financial institutions, we are revising our categorization 
of all Spanish covered bond programs to Category 2 from Category 1, where we 
initially placed them in 2009 in accordance with our asset-liability mismatch 
criteria. 
     -- This is primarily based on our view that Spanish banks' reduced 
ability to provide liquidity to the covered bonds of a potentially insolvent 
issuer, weaker demand for Spanish assets among a broad range of investors, and 
an increasingly uncertain likelihood of government support are no longer 
commensurate with a Category 1 classification.
    
     Nov 29 - Standard & Poor's Ratings Services today revised its
categorization of Spanish covered bond programs (cedulas) to Category 2 from
Category 1, under its methodology for assessing asset-liability mismatch (ALMM)
risk in covered bonds (see "Revised Methodology And Assumptions
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