An unnamed Spanish economic ministry spokesman has announced that they will be looking to issue CPI linked 10 year bonds to a market expected tune of around €4bn, though the ministry hasn’t yet decided on the amount. They will be using the ex-tobacco CPI number. Presumably because if Europe gets into trouble again everyone starts nervously chain smoking again


With inflation low bond rates suffer less income erosion and bonds linking to inflation (linkers) guarantee those real returns. It’s another case of a country ‘making hay while the sun shines’ while rates and inflation are low and it gives yet more safe haven options for investors, which is a further euro positive.

This morning Spanish 10’s trade at 2.94% +3bp.