S&P published a specific note on Spain economy on 31/10 where it states that the recent events in Catalonia should not have any immediate impact on its rating nor its outlook (BBB+/Positive). At the same time, Moody’s published a note on Spain which is more cautious about the risks of implementing Article 155.
Whether it’s the initiative of the Catalan or Spanish government, Catalonia is this week heading for elections at the beginning of 2018. Some will say the elections are constituent towards obtaining independence and the new Republic of Catalonia. Others will hold the view that they are autonomous elections under the protection of the 1978 Spanish Constitution. In fact what they will be are elections to clarify the current real political map in Catalonia.
The next chapter of the “Catalan saga” was revealed today. Prime Minister Mariano Rajoy has now warned that on Saturday article 155 of the Constitution will be implemented to suspend Catalonia’s autonomy. And amid this endless craziness, Puigdemont says that if this finally happens, the declaration of independence will be declared.
Catalan leader Carles Puigdemont had until 10 am on Monday 16 October to clarify whether he has declared independence or not. As was widely expected, he answered PM Mariano Rajoy in an ambiguous way, with neither a clear yes nor a no. He has until Thursday at 10 am to avoid the government applying article 155 of the Constitution.
We have reached the next stage in the Catalan crisis. Rajoy’s government – with the agreement of Pedro Sánchez and the Cs – has requested that Catalan president Puigdemont clarifies whether or not there has been a declaration of independence. Otherwise, article 155 of the Constitution will be implemented, implying a limitation on the region’s autonomy. Against this backdrop, Spaniards’ confidence is being eroded.
Link Securities | Despite the ongoing uncertainty in the wake of last Sunday’s referendum in Catalonia, investors returned to the Spanish markets yesterday, buying up both equities and bonds. The main driver behind this renewed interest is the decision by top Catalan banks, Sabadell and Caixabank, to move their headquarters away from their home base.
The Catalan government and its parliamentary majority have gone the whole hog to achieve their final objective: a unilateral declaration of independence which brings the Spanish government to their knees to accept their requests with very favourable conditions to construct this new state, whatever it takes.
Carax Alphavalue | Up until last Sunday’s events in Catalonia, Spain’s economic recovery was well discounted in market terms, Carax Alphavalue says. But after the Catalan government’s “pretence poll” and the central government’s “heavy-handed” response, investors view Spanish stocks as a more risky bet and less of a buy opportunity for now.
Spanish bond prices are not reflecting the risk of Catalan secession simply because the foreign economic press doesn’t rate the likelihood of it happening, nor the conflict which will follow 1-O.
French coverage of the Catalan independence referendum has something of the left-right split we saw in Germany, but most of the media are united in calling on Catalan and Spanish leaders to meet each other in the middle.