Spanish spreads push out to 450bps over Bunds

Data from Tradeweb and other sources today highlighted the growing spread between Spanish and Germany government debt.

The Spanish 10 year bond once again moved toward a 450 basis points spread against the German Bund earlier today, continuing the reversal of the narrowing of spreads previosuly seen between late July through October as the ECB moved to reassure markets of its support for the eurozone, and as the eurozone leaders moved to put in place an aid package for Spain, should it formally ask for a bailout.

However, since then there has been concern that Spain would not apply for assistance because it would be seen as politically difficult among the Spanish electorate. And the delays have once again brought into question the commitment of politicians to measures that the market deems necessary to reverse the sovereign debt crisis in the region.

On the morning of 12 November, the spread widened from 428 to 447bps, Tradeweb data shows. This was confirmed later in the day as the spread moved above the 450 level.

Thomson Reuters data suggest the yield on Spain’s debt has hit 5.88%, compared to 1.35% for Bunds. Only Japan, 0.73%, and Switzerland, 0.43%, are lower among a list of 20 developed markets.

Last week Spain sold €4.76bn worth of sovereign debt, but yields rose as bond buyers expressed fears that the country would shirk any application for assistance.

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