Spanish Sovereign

Spain’s spread over Germany widened on Monday ahead of Bonos auctions later in the week, a move that analysts attributed to attempts by the president of Catalonia to launch an independence referendum. Meanwhile, Italy suffered a slight rise at a 10 year bond auction on Monday, but managed to post a euro-era record in the five year part of the curve.

Tuesday had been a slippery day in the European corporate bond market, as a fall in equities caused two new issues to find underwhelming demand – a knock-on effect that has not happened for a long time. But by Thursday that was all forgotten. Four deals were launched, three of them triple-B rated and three of them 10 years, and all went well.

Tuesday had been a slippery day in the European corporate bond market, as a fall in equities caused two new issues to find underwhelming demand — a knock-on effect that has not happened for a long time. But by Thursday that was all forgotten. Four deals were launched, three of them triple-B rated and three of them 10 years, and all went well.

Abengoa issued €500m-equivalent of senior unsecured green bonds on Wednesday, pricing them wider than expected, owing to what one lead banker called “a weak market”.

Abengoa, the Spanish renewable energy and engineering firm, plans to sign a €500m-equivalent senior unsecured green bond imminently, as the company seeks to issue debt that reinforces its environmentally-friendly image.

Abengoa, the Spanish renewable energy and engineering firm, announced a roadshow on Monday for a green bond – the first in euros for a high yield issuer.

Scotland’s rejection of independence late this week started to cause ripples in a wider pool of capital on Friday morning, as Spain — facing its own separatist movement in Catalonia — tightened against Germany. But the move reversed later in the day after Catalan president Artur Mas insisted an independence vote in the region would go ahead.

Spain wiped nearly 13bp from its three year borrowing costs at auction on Thursday, while investors lent Ireland three month cash for free. But periphery yields may have even further to fall, after take-up at the European Central Bank’s first targeted longer term refinancing operation fell below analysts’ expectations — suggesting the central bank might have to dip into its dovish box of tricks once again.

Spain's borrowing costs rose at a short end auction on Tuesday, after an increase in its yields last week that analysts partly blamed on fears that rising support for Scottish independence could galvanise Catalonian separatists in Spain. While Spain outperformed its periphery peers on Monday morning, it wasn't enough to retrace the losses made last week, denting its month on month performance at the bill auction on Tuesday.

Fears that a vote for Scottish independence on Thursday could destabilise Spanish debt seemed to be overplayed on Monday morning, as the sovereign’s debt outperformed the rest of the eurozone periphery ahead of a Bono auction later in the week. Greece and Ireland are set to tap the short end of the curve this week.

This week's scorecard covers the funding progress of selected sovereign issuers. Read on to see which are over the 80% mark.

Spanish 10 year yields fell by the largest month on month amount at auction since September 2012 and the sovereign wiped nearly 50bp from its 30 year borrowing costs on Thursday morning. There was further joy for periphery sovereigns later in the day, with yields falling after a European Central Bank meeting — boding well for a planned Greek seven year bond later in the year.