Spanish Government Opens New Fund

November 17, 2008

The new Spanish government fund Fondo de Adquisicion de Activos Financieros (FAAF) will start operations this week. The fund is intended to strengthen domestic bank liquidity through asset purchases, with Cedulas or Spanish covered bonds playing the leading role. 'FAAF is intended to strengthen the liquidity of Spanish financial institutions through asset purchases, in order to stabilize the supply of credit to the private sector and to Spanish companies, which [have been] hard hit by the economic downturn,' Dresdner Kleinwort analysts said. 'It is not a refuge for nonperforming securities, however, but only accepts highly rated papers. Cedulas will play the leading role in this respect.'

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