IFR Comment: Should OMT target a reasonable 200bp spread?
Suspicion remains that a Spanish bailout will be delayed due to regional elections in Galician & Basque on Oct 21 and Catalan on Nov 25, or that Germany was looking to merge a Spanish bailout into one big crisis package that also involves Cyprus and Greece. But what we have now is another complication in the form of Spain wanting a guarantee that – when it requests a bailout – the ECB will target a risk premia on Spanish down to 200bp.
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