LONDON: Spanish bond yields fell on Thursday after a poll showed a majority of Scots plan to vote against independence, easing some concerns a breakaway Scotland could embolden a similar bid by Spain's wealthy Catalonia region.
A survey showed late on Wednesday that 53 percent of Scots intend to vote against splitting away from the 300-year union with the UK.
The poll, carried out by the Survation on behalf of the Daily Record newspaper, showed 47 percent intending to vote yes to the split.
Although the circumstances in Scotland are different from those in Catalonia, where a planned referendum for November is not recognised by the government in Madrid, investors had been unnerved by the potential fallout were the Scots to secede. Spanish 10-year bond yields were 6 basis points down at 2.22 percent, reversing some of this week's 20 bps rise after a weekend poll showed sharp gains by pro-Scottish independence parties.
"In general as the polls regarding Scotland were turning there was quite a bit of risk aversion being built in in quite a few markets and that's no exception in Spain," said Peter Schaffrik, head of European rates strategy at RBC Capital Markets.
"Today what we're seeing is a reversal (after the latest poll), we've seen it in sterling and we are it in Spain as well." Some in the market said the rise in yields this week had been overdone with Catalonia providing a pretext by investors to book profits after last week's fall in Spanish and other euro zone bond yields to record lows. Others remained wary as Catalonia - which accounts for 20 percent of Spain's national wealth - celebrates its national day on Thursday.
GREEK EXCHANGE
Elsewhere in peripheral euro zone bonds, Italian 10-year yields were 3 bps lower at 2.39 percent before the sale of up to 7 billion euros of three-, seven- and 15-year bonds many in the market expect to meet solid demand.
The European Central Bank's latest monetary stimulus is seen drawing investors looking to maximise returns from peripheral bonds that still offer high yields relative to those in top-rated euro zone bonds despite their slide last week to record lows.
"The auction will do well (Yield) Spreads between peripherals and core bonds are still substantial. Clearly this still offers some opportunities to grab yield," said Patrick Jacq, a strategist at BNP Paribas.
Focus was also on an offer by Greece to top up its recent three- and five-year bonds by about 1 billion euros and exchange them for outstanding T-bills instead of cash.
The exchange offer is part of a liability management programme by Athens aimed at improving the functioning of the secondary bond market, boosting liquidity and tightening spreads, a government official told Reuters last month.
Greek 10-year yields were down 3 bps at 5.61 percent.
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