DBRS on Wednesday assigned Banco Bilbao Vizcaya Argentaria cédulas hipotecarias a A (high) rating, the first rating of a Spanish covered bond programme by the agency, and a spokesperson for the bank said that it is good for everyone if the market is not dominated by just three rating agencies.

The rating agency began a push to rate European covered bonds in 2011. The BBVA rating comes after ratings of several Portuguese programmes and Bank of Ireland’s. DBRS also rates all programmes in its home market of Canada.

A spokesperson at BBVA said that having a third cédulas hipotecarias rating alongside existing ratings from Moody’s and Standard & Poor’s would be beneficial for investors and for the issuer. Its cédulas hipotecarias are rated A3 and A- by Moody’s and S&P, respectively.

He added that it was “good for everyone” that the rating agency industry is not confined to just three rating agencies.

DBRS already rated BBVA as an issuer – having begun doing so two years ago on an unsolicited basis, according to the BBVA spokesperson – with a rating of A, with Negative Trend. This compares with ratings of Baa3, BBB- and BBB+ from Moody’s, S&P and Fitch, respectively.

DBRS said that its cédulas hipotecarias rating reflects: the senior unsecured rating and outlook; the credit quality of the cover pool and the substantial support it offers in case of issuer default; and BBVA’s capabilities with respect to origination and servicing of cover pool assets.

Under the rating agency’s methodology, the covered bond rating, although linked to the issuer, can be one notch higher than the issuer’s rating in instances where DBRS Legal & Structuring Framework (LSF) matrices cannot be applied or their application would otherwise result in the covered bonds being rated at the same level as the issuer, said the rating agency. DRBS said that it has formed a view on the availability and sufficiency of the cover pool – with nominal overcollateralisation of 74% as of 31 January – to satisfy the claims of cédulas hipotecarias holders in a post-issuer insolvency scenario and that, as a result, the covered bonds can be assigned a rating of A (high).

DBRS said that a downgrade of the issuer would lead to a downgrade of the cédulas hipotecarias by an equivalent number of notches.

Although its LSF matrices do not apply in this case, DBRS noted that the LSF related to Spanish cédulas hipotecarias is “modest”.

The new rating applies to Eu48.06bn of outstanding BBVA cédulas hipotecarias, according to DBRS.