Bankinter | We maintain the Neutral recommendation. Our valuation for the Spanish stock index points to 10,005 points, which represents a potential of 4.6% as of Dec-20 and an estimated dividend yield for the 4.5% index, the highest among the indexes analyzed.
Spain risk premium
The Spanish Public Treasury has captured 6 Bn € with a new syndicated 10 year bond, with a demand five times greater, after raising great interest among national and international investors. Spain’s risk premium remains stable around 80 base points.
The Spanish government is facing a motion of censure. In the country’s parliamentary system, if one is presented it requires that an alternative candidate be put forward, who will certainly be the socialist Pedro Sánchez. The debate and the voting will be held on 31 May and 1 June, respectively. Considering the current composition of parliament, Bankinter’s experts provide below the three possible numeric combinations needed for the motion of censure to go through.
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.
Mari Pinardo | Do you remember the summer of 2012, when Spain’s risk premium reached a record high of no less than 638 basis points? Four summers later, this spread seems like it belongs to a completely different country. Since that fateful summer, Spain’s sovereign risk has declined nearly 550 bp and just last week broke the 100 bp threshold. There are basically three reasons which have pushed the risk premium through the 100 bp threshold: a date for Spain’s caretaker Prime Minister Mariano Rajoy’s investiture, the economic policies which have been in place in the Eurozone since April 2015 and the fact that it looks less likely the Fed will raise interest rates in September.
MADRID | By Julia Pastor | Spanish public Treasury will have its weekly appointment with investors on Thursday. This time the country will issue bonds with maturities of 5, 10 and 12 years, respectively. There would be nothing unusual about it if international investors’ appetite for the Spanish sovereign debt were usual. However, interests in national treasuries currently reach levels of the 90’s when, before euro’s introduction, those bought Spain’s debt during seven quarters without a break. The institution even considers the possibility of creating 50 years bonds. At this moment, the Spanish 10 years bonds yield under 3.25%. As the summer comes the benchmark debt could stand at around 3%.
BARCELONA | By Joan Tapia | Spain has seen its credibility boosted by the European Commission and other international players like the IMF. However, this brighter image has not been translated into more confidence from its citizens.