Covered bonds in the spotlight

Credit ’s covered bond roundtable, sponsored by Nomura, features nine specialists discussing issues facing the asset class, including liquidity, transparency, regulatoryframeworks and the relationship between the US and European markets

Highlights of the roundtable are also available as a webcast - click here.

Are covered bonds becoming a global phenomenon?

Reinolf Dibus: They are already a European phenomenon and I believe those countries in Europe that currently lack covered bond legislation will have some within the next five years. But it is not a global phenomenon. Do other parts of the world need such legislation? My answer is basically ‘no’. America has cheap financing through the agency borrowers and a variety of public sector bonds. And there is a lack of legal foundation and security for a covered bond product in Africa and Asia.

Carlos Stilianopoulos: It is going to be difficult to see issuers coming out of America or perhaps out of Asia. However on the investor side, it is already a global market, we’ve been selling cédulas issues into Asian accounts for the last 18 months, and though we haven’t sold into US accounts because we cannot issue in US dollars, there is demand from American investors too.

Otmar Stöcker: I view it as a global phenomenon. Asian, African and South American investors, particularly central banks have euro investments in covered bonds, mainly the German Pfandbrief. On the issuer side, South America established its own covered bonds in the nineteenth century, following the Spanish principle, and Mexico recently adopted a covered bond system, following the Danish style, so has Chile. There is ongoing dialogue with the Japanese, Chinese, Vietnamese and South Korean specialists, who are looking to introduce a capital instrument that investors can trust. Our Australian colleagues are thinking about whether they should introduce a system after looking at the experiences in the UK and Europe. And there is greater interest in the product coming from the World Bank and IMF, in addition to the large number of international conferences that are being held. The idea is global, the volume is currently concentrated in Europe, but this will change in the next five or 10 years.

Sylvie Vadé: The difficulties of the German banking industry two years ago and German Pfandbrief market have definitely accelerated the recognition of new legal covered bond frameworks in Europe. The French legal framework was built and improved on the German Pfandbrief model and has been a starting point for developments in other countries, such as Ireland and Spain. I think that the covered bond market is a European phenomenon but not yet a global one. If you look at the placement of the issues of European covered bonds, you see much more in Europe than in the US. The awareness of the product does exist but it will take some time before it enters the US.

How are new entrants affecting the asset class?

Neil Colverd: All new entrants are good: the more the merrier. Familiarisation on the domestic stage is good education for the product. Two years ago we were that very person, and having been around for 18 months now, with a reasonable issuance volume in Dublin, we see ourselves as one of the jumbo markets. We won’t see the growth of the last five years. Growth phase one is finished and you’ll see a split into perhaps two market sectors. There will be a slight division between the jumbo liquid legislations in Europe – Germany, France, Spain, Ireland – and the more domestic-orientated legislations where they service the more domestic counterparties or investors.

Xavier Baraton: This market is no longer booming as it was at the end of the 1990s, it is now at cruise speed, so I think this might have an impact on liquidity which has been lessened notably by electronic trading. We have a greater number of players with new frameworks and new issuing entities and it’s better for investors in terms of diversification. What investors want in a covered bond is quality, but liquidity becomes an issue because a large part of the investor base is built of active portfolio managers, who want to play the covered bonds as an alternative to government bonds.

Stefano Ghersi: When you talk about liquidity, very often the absolute size of the market is used as the primary metric in measuring liquidity. Just as important as the total size and the number of participants in the asset class, is the type of investor and their agenda. If every investor is motivated by the same macro factors on a single asset class or there is too much of a concentration of a single type of investor in an asset class, ultimately there will be more volatility and the asset class will be perceived to be less liquid. And if you look at the yield environment we are in, it’s clearly predicated to a large extent by an excess in liquidity.

Carlos Stilianopoulos: Some issuers are too small to issue large liquid issues, such as many of the savings banks in Spain, which are too small to launch issues by themselves. By issuing through TDA (titulización de activos) or AYT (ahorro y titulización), a number of borrowers, who would not have been able to come to the market, can bring out liquid structured deals. In the cédulas market, the outstanding volume is roughly €80 billion and the mortgage market can sustain a further €150 billion, a doubling of the last five years. Mortgages have risen in the first six months by 23% in Spain, above the expected 10–15%. The Spanish market is still in very good shape and liquidity is going to be around for quite some time.

Reinolf Dibus: It is a slightly different case in Spain compared with other markets because they are just concentrating on issuing jumbo deals. The Eurohypo group, the largest in Europe by size, issues only a maximum of a third of its up to €40 billion financing in jumbos. An increasing trend in the last two years, in Germany and to a lesser degree Luxembourg, is that more issuers are able to place huge amounts in registered bonds, structured bonds and private placements. We are seeing increasing demand for tailor-made smaller illiquid covered bond products as well, which is leading to different markets within Europe.

Sylvie Vadé: What is the breakdown per country when placing these structured issues?

Reinolf Dibus: It is very much domestic-driven, and placement is focused on the small co-operative banks in Germany, the saving banks and the insurance companies.

Stefano Ghersi: What is their incentive for buying the smaller private placements versus the larger liquid deals?

Reinolf Dibus: First of all there is still a tax advantage or a balance sheet advantage for insurance companies buying registered bonds. Maybe this will disappear with the IAS rules, but for the time being the situation will remain like this.

Sylvie Vadé: Do you think that this trend is sustainable in the future?

Reinolf Dibus: If the insurance companies can continue to have the chance to put the registered bonds into their collateral pools without being obliged to write down those bonds with market developments.

Mauro De Leo: Liquidity in the covered bond market is very good and likely to be improved further as a result of some important economic and social reforms in Europe For instance, pension reforms across all Europe will boost the activity of some key market players, such as insurance companies and the pension funds, increasing their appetite for highly rated securities and low-risk instruments. This will add liquidity and efficiency to the covered bond market, attracting even more classes of investors, especially on the long part of the curve.

What are your views on the success of UK structured bonds, despite the lack of a covered bond legislation?

Hélène Heberlein: From a rating agency perspective, covered bonds issued by HBOS Treasury Services or obligations foncières issued by Dexia Municipal Agency and other covered bonds in Europe being all rated triple-A have the same credit quality. Many investors, especially the traditional Pfandbrief investors, have voiced their concern about the lack of legislation in the UK and at the same time the lack of supervision; the two go hand in hand. They do not have the same faith in contractual agreements, as they worry these are easy to amend over time. Of course, this is ironic because in reality legal frameworks everywhere in Europe have evolved a lot in the recent past, but then the changes were mostly in favour of investors.
With covered bonds, it is sensible to start with the legal analysis first and find out whether the cover pool would survive the insolvency of the issuing bank. Then you are in a position to be able to assign ratings to covered bonds, which are to a large extent independent of the unsecured rating of the bank. This is achieved by assessing different risks – the quality of the assets, the maturity mismatches and interest rate mismatches, the operational issues – and coming to a conclusion based on all of these aspects.
One aspect of comfort is the supervisory role of banking regulators in each of the countries where there is a dedicated framework. In the UK the FSA has not taken any position on whether it will undertake any additional surveillance on covered bond issuers.

Xavier Baraton: The HBOS product and the UK covered bonds are good in terms of the various protection features given to the bondholders. Having said that, it’s true that a contractual agreement is a contractual agreement. A law can be changed but this will not be a stand-alone decision: you need an industry consensus to change the law. This will affect every player in the market and is different to any contractual agreement, where certain individuals are affected. Some investors may be reluctant to invest in covered bonds that rely only on contractual agreements. They may not look at the structures in detail, but having a law in place is an additional positive factor to look at when buying.

Otmar Stöcker: When we talk about covered bonds we mean bonds that are covered in such a way that the cover assets are reserved for the bondholders when the issuer goes bankrupt. So, this is a bankruptcy law issue. In Europe we have not had a single real bankruptcy situation in the last 100 years within the mortgage bank sector that damaged covered bonds. So we can only assess on a theoretical basis what could happen. But the bankruptcy law situation can be regulated in a more secure way through legislation.
The big problem is always how to make sure that in bankruptcy situations the cashflow from the covered assets really goes – in time – to the covered bonds and not somewhere else. Many investors start off buying small volumes of covered bonds for diversification before they start to think in detail about the product. And investors begin to see a difference in the depth or multitude of regulations regarding bankruptcy situations between German Pfandbriefe, French obligations foncières and Spanish cédulas.
It is difficult enough that there is no uniform specific legislation. The legal situation is different with every issuer in the UK and this hinders legal standardisation. Investors and analysts cannot do this tremendous work and so they have to rely a lot on rating agencies and legal opinions. And therefore I think that the UK sooner or later will introduce some legislation if they want to stay in the covered bond game.

How valid is the prospect of having one covered bond legislation in Europe?

Otmar Stöcker: We have been talking about that for at least 30 years and most countries just didn’t want it! One predicament is that there is so much competition in Europe, with each country striving to have the best covered bond legislation. Every country that has a covered bond system will create its own investor base in that country and this establishes an investor base for other covered bonds from other countries. This is very positive for the market, as the investor always likes diversification. One problem we don’t have is lack of capital in the world. It’s just that we have to convince investors to invest in European covered bonds.

Hélène Heberlein: If one legislation ever happens, it will be thanks to the good efforts of the people present here today in trying to lobby and to put forward this proposal, which is a good idea. But in my view it is nowhere near happening. The notion of covered bonds is very much embedded in the bankruptcy regimes, so if you want to have a unified covered bond legislation, you would first have to try to harmonise the bankruptcy regimes in Europe, which is a daunting task. On the other hand, there are countries like the UK that are very creditor-friendly, and at the other extreme, countries like France where bankruptcy laws are more in favour of the debtors. Unfortunately, this means analysts need to spend more time reviewing each framework and they are all so different.

Mauro De Leo: Technically, we believe it is possible to replicate the HBOS experience in most European countries and to structure covered bonds without the need of a specific domestic legislation. Nevertheless, there’s no doubt that the existence of a specific law that rules the instrument adds great value. Consequently, over the last few years, more and more European countries have approved specific covered bond legislations. By approving these laws, each country tries to assure investors that its class of covered bonds is well harmonised with the internal legal and fiscal framework and with the country’s existing bankruptcy proceedings. Due to the different characteristics of each single country’s domestic jurisdiction, the prospect of having one common European legislation is still far from being achieved.

Xavier Baraton: Investors are looking for diversification and the investor base has become very technical, looking at the new frameworks in detail to analyse whether they are matching the fund’s investment criteria or investment philosophy. People are not buying because it is triple-A or a German Pfandbrief, they buy because they like the mortgage bank, they like the quality of the assets, they like the asset liability match, they like the transparency and some of the specific features in the law, such as what really happens if there is bankruptcy.

Do you expect an additional spread for products where you have to do some more analysis and where there is no legislation?

Xavier Baraton: Time is money. The covered bond market is a liquid market and is supposed to be a very secure triple-A market by definition, so you want to be able to trade regularly rapidly. If we feel that the law is very strong and leaves very little room for manoeuvre to each issuing entity, you know that there will probably be fewer negative surprises, if any. We still do due diligence on an entity, but it is better for us to have a strong legal framework. One concern we have with the UK market is that the structures of the HBOS, Northern Rock and Bradford & Bingley transactions are all different, so it is definitely not ideal for investors.

Reinolf Dibus: Is it important for you that there are legal regulations on what the supervisory bodies should do? Do you prefer precise regulations forcing the supervisory authorities to do specific work on checking the cover pool or asset liability management?

Hélène Heberlein: Or even running the bank, right? Regulators want banks to be responsible and manage their risks properly, and their goal is to keep everything under control to ensure a safe and stable banking system. On the other hand, they don’t want to give the impression that covered bonds are government-supported entities! From the rating agency point of view, even the strongest legal supervisory regimes would not guarantee a certain minimum rating.

How is increased domestic competition in the mortgage market affecting margins?

Carlos Stilianopoulos: We are not seeing more competition from the commercial banks as they are common across Spain. Increasing competition is coming from the savings banks, especially La Caixa, which has been doing more business outside its local regions since the mid-1980s. Basically what happens is that the mortgages we lose in Madrid, we gain in Catalonia; they take ours, so we take theirs. We probably have lost some margin, but then again, we would have anyway with total rates coming down from double-digit figures we had in the mid-1980s. We have lost margin just by the movement in interest rates, but we are gaining this in excess through the huge rise in the mortgage market itself. Mortgages in Spain are very, very safe and our assets are as safe as they have always been. We have one of the lowest non-performing loan ratios or percentage in Europe.

Is there more risk when you go cross-border?

Otmar Stöcker: No, just the opposite. For instance, cross-border business in commercial real estate is not increasing the risk of the portfolio but adding diversification. German mortgage banks have a very modern and risk-sensitive approach to cross-border business, the same high standards whether they are doing business in London, Paris, Warsaw or Prague, with often the same international commercial real-estate investors.

Reinolf Dibus: If you want to be a European or global player in this market, you have to be present in different countries and have access to a totally new clientele. I foresee a development in the direction of real-estate investment banking where we don’t simply just do the financing of real-estate properties, but also offer consulting, syndication and securitisation. And all these new business areas will create fee income for us in addition to the covered bonds business.

Hélène Heberlein: Cross-border activity is one way of diversifying the cover pool, which is a positive factor, assuming that the originator has the necessary expertise abroad. In terms of risk, large, chunky commercial real-estate exposures are more of a problem than the atomised portfolios of residential mortgage loans, in that the cover pool becomes prone to event risk. It’s a question of granularity.

Is there a danger of a two-tier Pfandbrief market developing in Germany after the loss of the state guarantee of public banks?

Otmar Stöcker: No, it would not happen. If you want to convince the international capital market investors that we have a transparent system, you also need a transparent legislation and also a level playing field. We brought this problem of a split market to the German government, members of parliament and the banking sector some years ago. We put forward concrete proposals to our ministries and the banking supervision authority on how the new legislation should look. We should hear something in the coming weeks. The new legislation that comes into force in July 2005 will create a uniform basis for all German Pfandbriefe issued by private or public banks. The specialised bank principle will be replaced by specific regulations to ensure the quality of the Pfandbrief, like a special Pfandbrief licence.

What are the proposals for losing grandfathering status – and the potential for further downgrades – going to mean for WestLB Covered Bond Bank?

Neil Colverd: Our start date as the Covered Bond Bank in Ireland was October 2002; when we established the bank, we worked in various eventualities regarding the loss of grandfathering in July of next year. So it was not a shock: it’s part of the business plan and one of the reasons we looked at Dublin, which we saw as a greenfield site to put in place a portfolio which was not concentrated in Germany and had the diversification of a European portfolio. One of the drivers behind the Dublin bank was to take tradition and put it into a place where at the time we thought the benchmark legislation existed at that particular time. As Otmar Stöcker mentioned earlier, this is a revolving process: one country takes from the other and the idea is to have a portfolio of European assets diversified enough to basically survive the future movements in potential ratings.

Sylvie Vadé: Is the unsecured rating important from the investor or the rating agency point of view?

Hélène Heberlein: The focus lies more on operational issues than on the creditworthiness of the parent bank or originator or the unsecured rating of the issuing bank. Ultimately, covered bond investors look at the cover pool for their repayment, but there are a lot of decisions which need to be taken by someone, who we hope is a capable originator and/or servicer of these assets. One cannot think of a cover pool in isolation without a manager. Unfortunately, the unsecured rating is probably not the most appropriate means of assessing the operational capacities of a manager, it’s just the best proxy we have in most cases.
That said, in countries where we do not believe the cover pool would survive the insolvency of the bank, the rating of covered bonds is based on the unsecured rating of the issuing bank. For instance, this is the way we currently rate cédulas. But in most other main European markets, including Ireland, we are not notching up from the unsecured rating of the bank. We rely more heavily on asset analysis and also on asset and liability management.

How hard has it been for issuers to tap into the US market?

Neil Colverd: Common law is the basis for legislation in the US and Ireland and this we found to be a strong selling point for our first 144A issue. We placed 12% of that issue into the US, and it was a euro 10-year so it wasn’t the easiest maturity to digest. So my view is that there is a great potential for the US and it’s part of our medium-term strategy to diversify our funding base.

Carlos Stilianopoulos: We haven’t sold bonds in the US and have never tried selling into US accounts. But we have in Asia and we undertook several roadshows last year and this year. And we have sold into Asian accounts even though they have been withholding tax in our bonds, and we have had good take-up in at least the last three or four issues.

Stefano Ghersi: A lot of the Asian central banks are moving money to London-based management operations. Do you think this is going to enhance your access to this investor base?

Carlos Stilianopoulos: It will certainly make it easier for us to sell to these accounts. Nevertheless we expect that over the next year we should be able to sell into all accounts everywhere with the same conditions as our competitors, that is without having to withhold taxes from our funds.

Sylvie Vadé: We do not have access to the US market yet, as we are a new entity and started from scratch only five years ago. Our first step has been to enlarge our investor base across Europe and in Asia. We have accomplished this successfully as only 15% of our benchmark transactions are placed in France, the rest internationally with a high proportion going to Asian and central bank accounts. The next step for us is to access the US market – an important opportunity for us, especially following the developments of the US agencies, especially what Freddie Mac is facing.

Reinolf Dibus: But first of all we have to educate American investors more about the covered bond product. We did this in Asia in the mid-1990s and those investors now buy almost every covered bond product. The Americans are dollar thinkers and the covered bond market is a euro market.

Stefano Ghersi: Will there come a time when the US market can be accessed at a price benefit to the borrower rather than a price concession to the borrower, because generally speaking that has been the case?

Neil Colverd: Ask yourself the question, where does a US fund manager go if he wants to reduce his holding of US agencies? Say, he wants to cut his Freddie Mac exposure back by 10%, what’s the alternative investment for him?

Stefano Ghersi: There is a huge mortgage market domestically in the US, there’s European government bonds, there’s US Treasuries.

Neil Colverd: Right. As soon as you say European government bonds then you leave the door open to covered bonds, which are a diversified portfolio and something the Americans understand very well. The concept of underlying collateral is something they basically developed.

Stefano Ghersi: We would welcome a lot more involvement by US investors. From what you have seen of the investors, do you think that in the next two to three years they’ll be buying the same product through Europe and Asia? Or do you think they will always be buying it at a yield concession in relative terms? In other words, would a global book be priced more efficiently than a euro book?

Neil Colverd: In two to three years? Yes.

Otmar Stöcker: There is an interesting development in the US, where the agencies like Fannie Mae are dominating the mortgage market. US economists and politicians suggest splitting off the agencies and creating regional mortgage banks for funding mortgage loans. With that we would find a similar structure of covered bonds in the US as in Europe. Then we would have a very broad investor base for the European covered bonds in the US, too.

Xavier Baraton: Regulation surrounding the agencies could change in future because the US administration is obviously a bit more reluctant to continue to guarantee the agencies or give the impression that there is an explicit guarantee where there is not. So if you think about how these things could change and evolve in the US, you realise that perhaps there is no alternative. It could be stricter supervision, stricter rules, asset liability management constraints or maybe an explicit segregation of assets. So I agree that the agencies could look very much like European-style mortgage banks, without the guarantee of the state, which is probably what the administration wants.

Reinolf Dibus: I expect the European covered bond banks will do more and more business in the US dollar area. Consequently they will increase their US dollar-denominated covered bond-issuing business, which will give us further access to the American market.

Sylvie Vadé: The key point is the swap market, of course, because we have euro-denominated assets and need to swap into Euribor. If the swap market is not that favourable, it is impossible to access this market. This is crucial.

Reinolf Dibus: A lot of European covered bond banks are going to have US dollar-denominated assets in the mortgage and the public financing sector.

Sylvie Vadé: But regarding the balance sheet, the way of accounting is denominated in euros at the end of the day.

Reinolf Dibus: So you could foresee a lot of forex problems in the balance sheet?

Sylvie Vadé: First of all, it depends if you can match the assets and liabilities in US dollars.

How transparent is the market?

Xavier Baraton: Transparency is key because of the larger number of legal frameworks that we have seen over the last three years. It is important for a credit analyst to get access to clear information on the quality of the assets, the various mechanisms and the bylaws in terms of asset liability management. It is not fully homogeneous yet but has improved over the last three years because the pressure has increased. The number of buying opportunities with new names has compelled all issuers to issue more reports. Sometimes efforts have been motivated by regulation or the necessity to make public the duration gaps or the net present value of the assets.

Reinolf Dibus: So you are more interested in information you directly receive from issuers, rather than analyst reports from investment banks or rating agencies?

Xavier Baraton: For the buy side to do their job properly, they need first-hand information. It’s as simple as that. We go directly to where the information is and analyse it with our own methodology, which might differ from rating agencies, who themselves differ very significantly on some specific names or on some specific frameworks.

Reinolf Dibus: Do you think that’s a natural development for institutional investors? Many investors used to just look at the ratings. If a bond has two triple-A ratings, they simply go out and buy it and don’t have much idea about numbers or the issuing bank.

Xavier Baraton: Even when you invest in very secured assets like covered bonds, you definitely need to rely on your own resources. At HSBC AM, we have established a notching-down approach to covered bonds, where if we like the law, if it meets certain criteria and if we consider that the pool of assets is very safe, the bond will be rated triple-A. But if there are any red lights about the entity, its rating, strength, market share, business profile, the law or assets, the rating is lowered.

Are issuers are doing enough to help the transparency process?

Hélène Heberlein: We have to recognise the efforts being put into improving the situation. But it’s probably not quite where we all want it to be. Fitch’s ratings of Pfandbriefe issued by Landesbanks are based on the guarantee provided by their regional state, and we expect this will no longer be the case from next July if any new Pfandbriefe are issued after this date. So these issuers need to be aware that they will have to provide more detailed information than what they have provided us with so far.

Otmar Stöcker: Everybody has a different priority. Investors are asking for more and more disclosure so they can compare issuers, and whatever information we decide to disclose it should be the same by every issuer to be comparable. The problem is that the investors and the sell-side analysts do not agree what it is they want. Germany will introduce a new Pfandbrief law and therefore we are discussing what the new legislation should contain and what should be the minimum standard for disclosure.

Mauro De Leo: It is difficult to say that there is ‘perfect transparency’ in a market that has so many different regulations. A partial lack of transparency results from the lack of a common European legal framework. Therefore, it is up to the borrowers and to the lead managers to provide the market with the highest amount of information and to help investors to undertake a good relative-value analysis. Over the past year Nomura has been trying to help investors, both in Europe and Asia, to compare different classes of covered bond in terms of over-collateralisation, asset segregation mechanism and many other different legal and contractual terms.

Otmar Stöcker: I have spoken to many Japanese investors on their approach to covered bonds, in particular the importance of ratings. One of the largest Japanese insurance companies told me that a rating is very important but it is not everything, as they rely on their own expertise and want to see regular information. The problem for issuers is what information to provide, how often and on what basis – via the internet or just on demand? Our members are convinced that only with regular disclosure can we convince the market of the high quality of the German Pfandbriefe.

New Spanish insolvency laws are coming into effect. How will this affect your view of the Spanish cédulas market?

Hélène Heberlein: The new Spanish bankruptcy regime will come into force in September. The retroactivity rule states that a number of legal acts that a bank has undertaken could be questioned again. The legal validity of these acts could be jeopardised if the bankruptcy receiver decided that the actual date of the insolvency was much earlier than the point at which the insolvency was declared. It has now been reduced to two years prior to the opening of bankruptcy proceedings, but this in itself is not something that would change our view on rating cédulas.
A stronger improvement concerns what happens to cashflows in an insolvency scenario. Previously, the assets would be frozen and unavailable to any investor, either unsecured or secured. This was the main reason why Fitch could not disconnect the rating of the cédulas from the unsecured rating of the bank. The cédulas are so over-enhanced that the prospect of recovery is very strong. Fitch awards up to two notches above the unsecured rating of the bank – if it is investment grade – to reflect expected recoveries on this product. With the new law, cashflows from the cover pool will be allocated during bankruptcy proceedings to the cédulas investors. To the extent that they are sufficient, they will be used to service coupons and the principal at their due date.

Carlos Stilianopoulos: Admittedly, we have to do some more fine-tuning in Spanish legislation. The cédulas law dates back to the beginnings of the 1980s, and it is one of the oldest laws right now and it needs modification. We are open to suggestions on what the market needs, what investors in particular need. This is a market where we depend on the investor, and investors are perhaps the cleverest people in this market – more so than the issuers. If they are buying the bonds, it is because they like them. Transparency in the cédulas market is high, our issuance programme is listed with the Spanish stock market regulator, the CNMV, and the Bank of Spain supervises us by checking all the levels, such as mortgage and coverage ratios etc. If we get anywhere near the over-collateralisation level, they will know before anyone else. So we have a high level of control on what is happening in the mortgage pool and the bank. If we include all the regulation changes that are occurring, then we are in a very safe market right now.

Xavier Baraton: The key for the Spanish market will always be bankruptcy remoteness, something that is very difficult to achieve. Some investors are still reluctant to buy cédulas due to the legal framework because if there is no law establishing clearly the segregation of assets, then they will not buy it. So making progress on this point must be a long-term goal if Spain wants to belong to one of the top laws in terms of quality.

Thank you all for your time.