Spanish Sovereign
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A vote for the UK to exit the European Union next week is likely to intensely magnify a strong rush into safe haven assets, but some bankers are still confident that after the initial furore of a ‘Brexit’ there could be room for issuers eyeing euro deals in July to go ahead. And, if the UK opts to stay in the EU, issuers are likely to be lining up to print in July. -
A rush to safe haven assets amid fears of a UK exit from the European Union crystallised higher Spanish bond yields at a bond auction on Thursday.
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Catalonia’s finance minister will describe a Moody’s downgrade of the region as “artificial and irrelevant” later on Friday, according to GlobalCapital sources.
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The Autonomous Community of Castille and León sold on Wednesday its first bond in several years, eschewing the cheap funding available from its central government in favour of greater independence.
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A Spanish region is set to bring its first syndication in 18 months, after mandating banks on Tuesday for a five year euro deal.
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Instituto de Crédito Oficial has sold what some bankers believe may be the first negatively yielding bond from a Spanish issuer.
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Spain made a storming entrance to the 50 year benchmark club this week, lending weight to the possibility that the tenor could become a more common maturity as eurozone rates scrape along at record low levels.
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Spain showed that a 50 year euro benchmark is not just the preserve of core eurozone sovereign issuers on Wednesday and had plenty of leftover demand to suggest that Italy could follow with a half century bond of its own.
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Spain has nipped in ahead of its eurozone periphery peer Italy, mandating banks for a debut 50 year euro benchmark on the same day that the Community of Madrid had a strong showing at the short end and Greek yields rallied across the curve.
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The Community of Madrid is preparing its first syndicated bond in a year, as the Republic of Italy considers following the lead of France and Belgium by publically issuing a 50 year bond.
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Italy privately issued a long dated inflation linked bond and Spain drew strong demand at an auction of index linked paper this week, as bankers suggested interest could be returning to the asset class as investors bet on a return of inflation in the eurozone.
