Spain

Spain's spread over Italian bonds could widen further as investors fret over its finances while responding positively to the reforms led by Italy prime minister Matteo Renzi, despite Spain shrugging off a move from positive to stable outlook from Moody's late last week.

Rating agency Moody’s on Friday added its voice to those of analysts and investors in London and Madrid asking for details on Abengoa’s debt reduction.

Spain took advantage of much better conditions compared with turmoil last week to cut its three and five year borrowing costs at auction on Thursday — although its 10 year yields rose.

Bankia will repay retail investors the €1.85bn they invested in the Spanish bank’s ill-fated initial public offering, to compensate them for losses incurred.

European credit markets, led by the banking sector, have seen risk escalate over the past several weeks with the Markit iTraxx Europe Main index seeing its spread widen to the highs of June 2013. One bright spot however, has been the region’s sovereign credit, which has largely steered clear of the contagion that developed in the corporate market.

Spanish renewable energy company Abengoa has asked lenders to sign a new credit facility as its March 28 deadline to avoid bankruptcy looms ever closer, but an accord appears elusive.

The widening spreads between core and periphery eurozone government bonds may lead some issuers to hold back from bringing deals, say bankers.

ArcelorMittal on Friday announced the sale for €875m of its 35% stake in the Spanish car parts supplier Gestamp Automoción to the Riberas family, who are yet to disclose details of how they will finance the purchase.

Caixabank issued its largest Cédulas in five years on Monday. It was also the biggest since 2014 and enticed more investors than any Spanish deal in three years.

Spain cut yields but printed at the lower end of its size target at a long end bond auction on Thursday, although bankers are confident that there would be demand if the sovereign chose to bring a long dated syndicated deal.

Spanish real estate firm Merlin Properties does not plan to rush its bond market debut, despite having hired Moody's and Standard & Poor's to provide credit ratings.

Italy is set to benefit from a Bank of Japan-induced rally in eurozone government bonds late last week after mandating for a 30 year benchmark on Monday — and bankers suggest Spain could follow with a similar deal.