Investors begin to see Spain out of the woods


Tensions on the sovereign debt markets seem to have abated during the first weeks of 2013, particularly for the southern European countries and specially in Spain’s case. So much so that the Spanish Treasury has recently begun to sell state bonds with longer maturities. In an investor note on Wednesday, BNP Paribas said it forecasts a Spanish premium risk under 350 basis points and a prolongation of the average life of the government debt–that is, more time to pay back.

Until 2011, Spain had seen the average maturity of its debt stock widen. In 1987, it was of 2.7 years; it was of 6.6 years in 2010, and 6.5 years in 2011. This figure shrank further in 2012, down to 6 years. Because of Spain’s domestic crisis and the global credit crunch, too, the Treasury has had to cut down maturities in the past bond auctions, as well as a consequence of lower investor confidence. The highest volume of gross debt issuance focused on the 3-year term.

“This year had confirmed the same trend, with a €3.4 billion issue at 3 years and €2.6 billion in issues at different maturities,” BNP Paribas analysts explained, “but the last auction, at 10 years, may signal a change.” The question would be if it will be a sustainable change.

About the Author

Victor Jimenez
London contributor at, reporting about the City and the Eurozone economies. He regularly writes for Spanish newspaper group Prensa Ibérica--some of his features include shared work with journalists of The Daily Telegraph and the BBC.

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