Felix Salmon thinks that Banco Santander's recently announced buyback of 16.5 billion euros of covered bonds is '...more like an act of desperation than one of strength.'Countering this view would be a recent Bloomberg report noting that banks (including the thought to be very sensible Bank of Nova Scotia) were once again extending ample credit to purchasers of commercial loans and mortgage bonds. Clearly, the reference is to securities in the American market, but we can't think of any way in which that changes the obvious conclusion - that asset-backed paper is no longer collateral non grata at the corner pawn broker. If the lenders are assessing the situation correctly (and there's no guarantee that that is the case), Emilio Botín would be a fool to let hedge funds jump the queue for his own notes.
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