Some Spanish covered bond issuers are not complying with Bank of Spain disclosure requirements introduced in December 2010, said Moody’s yesterday (Tuesday), resulting in discrepancies in data between different institutions – although the rating agency added that cédulas disclosure has improved markedly in recent years.

In a report, Moody’s said that it had been hopeful that the law, Circular 7/2010, would lead to greater disclosure through its requirement for extra information in annual reports on the assets backing cédulas. However, the rating agency said that important data continues to be obscured.

“Although the new law (effective December 2010) significantly improves the disclosure requirements of Spanish covered bond issuers in their annual reports,” said Moody’s, “the fact that some issuers are not yet compliant means that there continues to be discrepancies between different issuers’ published data.”

The rating agency said levels of over-collateralisation were among the most notable figures affected by this lack of transparency. It estimated the over-collateralisation levels of some programmes could be at least 50% higher than the numbers seen in Moody’s quarterly performance reviews.

It said that inconsistencies in reporting made comparisons of programmes a challenge.

“Some of the areas where data presentation is inconsistent include (i) the inclusion of securitised loans in cover pools; (ii) the amount of collateral relative to the covered bonds issued; and (iii) the definition of an ‘eligible’ asset,” said Moody’s.

The rating agency said that it does not expect this to affect ratings and said that it acknowledges that making data consistent across a wide range of issuer is “an onerous challenge” and that Spain has set “an extremely high standard” in disclosure.

“Information disclosure has improved markedly over recent years and Moody’s will continue to work with market parties to continue to improve information disclosure,” it said.