Spain

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.

Wind turbine company Nordex signed €1.4bn in loans on Tuesday. The five bookrunners flexed to accommodate a planned acquisition, in what was intended to be a plain refinancing.

Spain is expected to issue the third highest amount of covered bonds in 2016 but with redemptions considerably above that level, the country also faces the highest net negative issuance of any jurisdiction. With the economy set to grow at almost double the pace of Italy and Portugal, the credit and spread outlook will remain positive, unless there are any political surprises.

Corporate borrowers in peripheral Europe have a golden opportunity to borrow thanks to the ECB’s targeted long term refinancing operation (TLTRO) help for banks – stalling the march towards bond and private placement predominance.

Abengoa has triggered a failure to pay credit event, ISDA's Determinations Committee has ruled, only days after the company narrowly avoided a bankruptcy trigger for most credit default swaps.

Abengoa will come under further scrutiny from ISDA’s Determinations Committee on Friday, only days after the Spanish renewable energy company narrowly avoided triggering a bankruptcy credit event for most credit default swaps.

Repsol, the Spanish oil producer, issued a €600m five year 2.125% bond on Wednesday, in a torrid week for commodity markets, to finance a buyback of some Talisman Energy bonds.

Abengoa avoided triggering a bankruptcy credit event on Tuesday by only a single word change in legal documentation after ISDA spent more than a week boggling over Spanish laws and its own credit derivative definitions. But as GlobalCapital went to press, the firm looked to be on the brink of triggering a failure to pay credit event instead, having acknowledged it had missed commercial paper repayments. Dan Alderson reports.

The movement of one word – 10 places to the left – in ISDA’s credit derivative definitions was the determining factor in the trade body deciding that Abengoa had not triggered a bankruptcy credit event for most of its credit default swaps.