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TWO SPANISH savings banks this week took advantage of the Bank of Spain's ruling that it will accept triple-A rated Spanish mortgage backed securities as collateral for liquidity borrowing. Each of the issuers would have been happy to retain the entire value of its mortgage backed deal to use as repo collateral, but both ended by selling some of the bonds to third party investors in Spain.

LEHMAN BROTHERS has launched two huge mortgage securitisations from its Sasco shelf in the past week, prompting market participants to surmise that the bank was anxious to take assets off-balance sheet as quickly as possible. But other sources said the deals were planned months ago to be launched now. Sasco Series 1998-C3 was the largest commercial mortgage backed security ever issued, offering $3.872bn of floating rate paper in at least 20 tranches. The deal came at spreads so wide that even CMBS professionals who have been coping with turmoil in the sector for the last few weeks were surprised.