Greek poll result takes pressure off Spain’s credit spread

Date: Monday 18 Jun 2012

European Commission spokesman Amadeu Altafaj said he expects a positive action in Spanish equity and bond markets after the Greek election outcome.

The New Democracy party came out a clear leader in Greece’s elections and is expected to form a majority coalition with pro-bailout partner Pasok, reducing uncertainty about a rupture of the euro.

Altafaj was asked in an interview with Spanish radio station RNE if he thought these election results would calm the tension in sovereign debt markets and responded that “we hope that will be the case”.

Indeed, European markets are opening with average gains of 1.5%. We can also clearly see that the pressure is lifting on the Spanish 10-year Treasury bond as its yield drops from 6.87% to 6.85% and the credit spread narrows to 533 basis points from Friday’s close at 543.7.

The Spanish Treasury will be testing credit markets with two auctions this week. Tomorrow the country will auction off 12 and 18 month notes, followed on Thursday by bond emissions with maturities on April 30, 2014; July 30, 2015 and July 30, 2017.

SC

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