Standard & Poor’s placed the A+ rating of cédulas hipotecarias issued by Ibercaja Banco on CreditWatch negative yesterday (Tuesday) after having put the issuer on negative review because of concerns over its possible acquisition of another Spanish banking group, Banco Grupo Cajatres.

Ibercaja’s cédulas are rated A+, after having been cut from AA- on 11 November because of a recategorisation of Spanish covered bonds from Category 1 to Category 2 in S&P’s framework. The recategorisation reduced the number of notches of uplift that Spanish covered bond programmes can achieve over their issuer from seven to six.

S&P said that as Ibercaja’s cédulas benefit from the maximum six-notch uplift over Ibercaja’s BB+ rating, any downgrade of the issuer would lead to a downgrade of its covered bond programme.

Ibercaja was placed on review for downgrade on 4 December after the announcement of a potential agreement to acquire Banco Grupo Cajatres. S&P said that the acquisition could weaken Ibercaja’s standalone and credit risk profile.

S&P said that before the acquisition most of Cajatres’s real estate exposures would be transferred to Spanish asset management company Sareb as part of government plans to restructure the banking system, but that Cajatres’s remaining loan book could still weaken Ibercaja’s risk position, which is currently assessed as “strong”.

However, S&P also acknowledged that Cajatres has a more balanced funding structure than Ibercaja and that after the transfer of real estate assets to Sareb Cajatres is likely to receive liquid securities that are eligible for discount at the European Central Bank. The acquisition is also likely to reinforce Ibercaja’s market position in some parts of Spain, said S&P.

The acquisition agreement is subject to the approval of Spanish and European authorities, and of the two banks’ general assemblies. S&P said that it will conclude Ibercaja’s review after the finalisation of the acquisition, which is expected to happen by the end of the first quarter in 2013.

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