Barclays, Jefferies upbeat on Spanish bank fundamentals into Q3 results

** Barclays notes that across Spanish banking space "fundamentals remain supportive, but higher rates bring both earnings upside and new risks" into the third-quarter results

** It says higher rates could offer meaningful benefits in 2028 as asset repricing gathers pace, though factors such as slowing deposit growth and intense mortgage pricing competition act as offsets

** Barclays upgrades Sabadell, citing greater confidence in its ability to deliver net interest income and cost targets following the renegotiated Amundi AMUN.PA agreement, higher rates and efficiency measures announced to date

** Meanwhile, Jefferies notes that "fundamentals remain firmly intact" with resilient asset quality and volume growth acting as a bright spot

** Jefferies adds that the September yield shock in the bond market has led to a material increase in the sector's cost of equity and lower valuation multiples

Rating changes by Jefferies: