Spain's election unlikely to derail economic path
TLT•Spain's prime minister called an early election for November 29 after parliament rejected housing decrees. Capital Economics expects the election not to alter the economy's prospects, while Citi said the announcement is not a material earnings event for Spanish banks.
1. Election and outlook
Prime Minister Pedro Sanchez called an early election for November 29 after parliament rejected the government's housing decrees. The People's Party is ahead in polls, but Capital Economics said the election is unlikely to alter the economic outlook and expects public debt to keep falling.
2. Bonds and banks
Spain's 10-year bond spread to Germany widened 15 basis points last week, though Spanish bonds were not sold at the pace of French or Italian bonds. Citi said investors will focus on whether a new government changes the state's approach to its CaixaBank shareholding, banking consolidation and the banking levy; it does not view the election announcement itself as a material earnings event for Spanish banks.
