Spain

The Spanish Treasury is studying the possibility of issuing green bonds — a shift from its previous position on the format — after the country’s government last week outlined a series of measures to decarbonise the economy by 2050. Spain is also adjusting its inflation-linked bond issuance strategy this year. If the sovereign does decide to issue green bonds, it is likely to find strong demand, with one of its own debt issues as well as a returning Spanish region this week being heavily oversubscribed.

Galicia on Thursday made a triumphant return to the bond markets on Thursday as it became the latest Spanish autonomous community to print after several years away.

The Spanish Treasury is studying the possibility of issuing green bonds — a shift from its previous position on the format — after the country’s government last week outlined a series of measures to decarbonise the economy by 2050. Spain is also adjusting its inflation-linked bond issuance strategy this year.

Galicia is set to become the latest Spanish autonomous community to return to the bond markets after many years of absence, after it mandated banks on Wednesday to sell a new issue. It could also come to the market for a second time later in the year.

Bankinter found plenty of demand for a new senior transaction on Wednesday, as the Spanish lender entered a strong market to refinance its only other outstanding senior bond.

Investors have moved on quickly from the first ever non-call decision on an additional tier one instrument this month, allowing banks to thrive in the new issue market. The feeling among some funds is that any fears about extension risk have simply been overdone.

Spain's no-grow €5bn 15 year syndication on Tuesday was only marginally short of breaking the record order book for a public sector euro benchmark that the sovereign set only last month, despite some investors saying that the deal offered little or no concession.

The European Stability Mechanism on Monday took care of all its first quarter funding needs in one fell swoop, drawing a heavily oversubscribed book with high Asian demand that allowed 2bp of price tightening. On-looking SSA bankers said the deal was a good sign for — and likely gave confidence to — Spain, which is bringing its second syndicated benchmark of the year on Tuesday.

The bigger surprise in the financial institutions debt market this week was not that Banco Santander decided to extend the life of an additional tier one bond, but rather that the subordinated debt market took the decision in its stride.

Investors backed the return of the Balearic Islands to the bond markets on Tuesday with the Spanish region selling its biggest ever single tranche bond. It was able to attract huge demand despite the threat of a snap general election in Spain — a prospect that looked increasingly likely as the week neared its end.

BBVA did not have to offer any premium to investors to bring in a new tier two bond on Thursday, according to lead managers, as asset managers show renewed thirst for debt from southern European financial institutions.

Rating: —/BBB+