Spanish Elections Complicate UBS Recommended Bond Trade

A UBS report on investing in Spanish government debt, issued September 25, may need to revise its thesis. After under-performing the market due to political concerns, the report said it might be time for institutional investors to consider Spanish government debt offerings – particularly on a relative value basis with German and Italian government debt. However, the investment thesis was based on a somewhat ambiguous political result.

Watch for a 135 point basis point German / Spanish bond differential to close

In a report titled “When to buy Spanish bonds (and when not to),” analysts believed the spreads between Germany’s pristine government debt and that of Spain could...