Spain

The International Swaps and Derivatives Association this week published an initial list of 35 bonds to be considered as deliverables in the forthcoming Abengoa credit event auction, which will settle 2014 credit default swaps, but not updated 2003 transactions.

Abengoa, the Spanish construction and renewable energy group that is in pre-insolvency proceedings, signed a €106m loan on December 24 to pay employees' December wages, but will need more cash this month to avoid a full insolvency filing.

Eurozone quantitative easing may benefit new high yield issuance less than it will help other primary debt markets, Standard & Poor’s said in its European corporate credit outlook for 2016 on Monday. Nevertheless, market participants remain hopeful.

The Spanish treasury has named Danske Bank as a primary dealer for its government debt from January 1.

Stocks in Madrid tumbled on Monday, after Sunday’s election left the country without a clear prospect of a stable government. Yet one of the best performing shares was Fomento de Construcción y Contratas, the construction company, which maintained nearly all its gain after last Thursday’s news of a €709.5m rights issue.

Abengoa, the engineering and renewable energy firm, woke up on Monday up to two lawsuits from share and bond holders in Spain, while lenders agreed to inject €100m so the company could meet December’s payroll.

Spanish government bonds sold off on Monday as the country enters a period of political uncertainty following Sunday’s election.

A lack of trading activity on Monday shielded Spanish FIG spreads from the worst effects of an inconclusive general election result, but the riskiest paper took a hit.

Over €30bn of covered bond supply is expected from borrowers in Spain and Italy next year but with nearly €40bn of Cédulas redeeming, the technical backdrop is most constructive in Spain.

The auction to settle credit default swaps referencing Abengoa will take place in January, after the Spanish renewable energy company last week triggered both failure to pay and bankruptcy credit events.

Investors appear to be confident that a Spanish general election this weekend will return a market-friendly result, with the sovereign enjoying much tighter spreads to its nearest comparable than earlier in the year — despite its yields rising at a debt auction this week.

As the Spanish populace geared up for a general election over the weekend, the Spanish Treasury wound down its 2015 auction programme with a sale at the lower end of its target volume range on Thursday.