Multi-cédulas issued under the AyT Cédulas Cajas Global FTA programme can be bought back by the issuer after programme documentation was amended to allow for voluntary early amortisation of the securities, according to rating agencies.

Moody’s and Fitch said that the ratings of the multi-cédulas, managed by Ahorro Corporación, will not be affected by the change, which Fitch said it understands was motivated by “the willingness of originators to profit from favourable market conditions”.

“These profits will help them improve their capital ratios,” it added. “Another effect of the early amortisations is the increase of the originators’ overcollateralisation ratios resulting from the reduction of the outstanding balance of cédulas hipotecarias.”

Moody’s noted that any buyback would be voluntary for investors, who will be able to pick the number of notes to sell back to the issuer, and that the redeemed notional amount of the notes and of the underlying covered bonds in each series will be the same.

“The relative composition of the underlying covered bond portfolio will not change as the redeemed notional will be allocated pro rata to each covered bond issuer in the portfolio according to its relative weight in the series,” it said.

Fitch said that the buyback option may result in some notes being repurchased at prices potentially below face value, but also noted that investors have the option and not the obligation to participate in any early amortisation.

It said the amortisation option does not have an impact on the ratings because a buyback would not change the concentration characteristics of the affected series even if exercised at a price below par, and that early amortisations will only be possible if the ratings of all series of the programme are not affected by the amortisation of a given series.

Early amortisation might affect the liquidity requirements at the programme level, added Fitch, but would not modify any other characteristics of the transaction, such as portfolio composition, payment terms, or interest rates.

The rating agency also noted that the liquidity reserves for four series under the AyT Cédulas Cajas Global programme have been partially replaced by a guarantee of the European Investment Fund, but that this does not impact the covered bonds’ ratings. Liquidity line amounts not covered by the guarantee from EIF will continue to deposited at the Spanish branch of Barclays Bank, the account bank of the issuer, for three other series launched off the programme.