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BBVA Deal Update

27 November 2020 by jbchevrel

Today BBVA SLAC CDS was among the best performing single-names in both Main and Senior indices. The 5y contract is tighter by -4bp on the day, closing at 70bp. This is because BBVA and Sabadell have given up merger talks which they had confirmed 2 weeks ago, because of disagreements over the pricing of the deal. In equity space, BBVA rose (Mkt Cap €25b) Sabadell collapsed (Mkt Cap €2b). Sabadell now says that they may try to sell the British lender TSB that they own. Regulators supported this acquisition project, as it is seen as bolstering the Spanish banking sector’s resilience as a whole. The hypothetical entity would have represented almost 25% of the Spanish domestic market’s loans, deposits and mutual funds. That compares with 15% for Santander and 25% for the pro-forma Caixa Bank - Bankia, whose boards are expected to approve their merger. BBVA SLAC CDS closes the week at 70bp, about 5bp wider than Santander for the SLAC. BBVA SLAC CDS is now less than 10bp away from its levels before COVID started roiling market in Q1 (it was low 60s at that point in time).