Spain

Spain’s 10 year borrowing costs dipped below 2% on Thursday for the first time since May, as the sovereign approached the three quarter mark on its funding schedule for 2015.

Spain slashed its one year borrowing costs at auction on Tuesday but the yield was still higher than the lowest level the sovereign has achieved so far this year.

Spain could be set to record its lowest borrowing costs at a 10 year auction since May if its yields hold steady this week, after its levels tumbled in secondaries on Monday.

Shares in Abengoa, the Spanish renewable energy developer, jumped initially today after it won a €600m contract, but bondholders have not yet felt any relief from the distressed levels at which its notes are trading.

Spanish renewable energy developer Abengoa became this week’s market punchbag after on Monday announcing a shock €650m rights issue that left both debt and equity investors running for the hills, writes Victor Jimenez.

Spain is often held up as an example of how austerity works, and Markit data published on August 5 provides some support to this view.

Spain raised just shy of its maximum target at auction on Thursday, as polls this week in Spain suggested support is declining for anti-austerity party Podemos ahead of elections later this year.

The European Covered Bond Council (ECBC) will present its new dual-recourse bond structure to an audience of regulators, central bank heads and other stakeholders in October – a meeting which will be a barometer of official sector appetite for backing the product.

Spain’s construction and energy company Abengoa on Monday announced an unexpected €650m capital raise, which triggered immediate selling in its shares and bonds.

Covered bond new issue premiums fell this week as six issuers raised a collective €5.5bn in three currencies with total demand of almost €8bn.

The secondary market is no longer a relevant tool for covered bond price discovery, say bankers, as spreads have come only to reflect the level at which the eurosystem will buy bonds rather than regular investors.

Spain’s Banco Santander on Thursday announced a 24% surge in first half profits as revenues grew and provisions shrank in its far-flung retail network, although its wholesale banking unit turned in a roughly flat performance.