The cédulas hipotecarias of seven Spanish issuers have been upgraded by S&P, with six lifted into double-A territory, following an upgrade of the sovereign last week, bringing improved regulatory treatment and performance potential for some.

S&P upgraded its unsolicited rating on Spain from BBB+ to A- on Friday, citing factors including continuously strong economic performance in the country.

As previously reported, this raised expectations that S&P would announce a wave of upgrades to cédulas hipotecarias, and yesterday it upgraded seven covered bond programmes by one notch.

It upgraded from A+ to AA- the cédulas hipotecarias of BBVA, Bankia, Bankinter, CaixaBank, Ibercaja Banco and Kutxabank. The cédulas hipotecarias of Deutsche Bank SAE were upgraded from A to A+.

The ratings on all of the programmes remain on positive outlook, reflecting S&P’s positive outlook on Spain.

Analysts noted that the upgrade into double-A territory will bring some cédulas improved preferential treatment, with the cédulas of Bankinter and Kutxabank moving into the second best credit quality step (CQS) 1 bucket and will now benefit from improved risk weights and LCR classification.

BBVA, Bankia and CaixaBank already had ratings in the CQS1 bucket, while Ibercaja Banco’s second best covered bond rating remains in CQS2 bucket – Moody’s rates its cédulas A1.

The new improved regulatory treatment could have an impact on the performance of issuers’ outstandings, according to analysts.

“The mortgage covered bonds of Bankinter have been trading at a pick-up versus CaixaBank for at least half a year now,” said Maureen Schuller, head of financials at ING. “The alignment of the second best ratings for the bonds may support some spread convergence between the two names again.”

Two cédulas hipotecarias programmes that were placed on positive outlook in April 2017 alongside the upgraded programmes but which were not upgraded yesterday are those of Abanca and Cajamar Caja Rural. S&P said when changing the outlooks that Abanca’s programme would benefit from an upgrade only if the bank were also upgraded.