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Spanish Renewables and Other Regulated Assets. What Is the Fair Price of Spain's 10-Year Bond?

1 h 20 mins.
20 JUNE, 2018
Ignacio de la Torre null
Leopoldo Torralba null
Spain AER Global AER Personal
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The interest rate of Spain's 10-year sovereign bond is the primary variable that, in our opinion, guides the remuneration framework of most regulated assets. In addition, its influence is key in other essential aspects such as financial and real estate asset valuation, financing costs, fiscal deficits and banking’s financial health. After an extended period of ultra-low interest rates, courtesy of central banks’ heterodox policies, we find ourselves at a decisive turning point, with the Fed reducing its balance and the ECB halting its bond purchases… We are already immersed in a monetary policy tightening process and, in consequence, the sovereign bond rate should rise. The implications for regulated assets and the economy in general could be significant. This report answers the following questions: - What would be the fair interest rate for the Spanish 10-year sovereign bond year sovereign bond as justified by economic fundamentals? - How soon could it be reached? - And what are its main drivers? - What will be the main repercussions regarding regulated assets and the Spanish economy in general? - What would be the recommeded strategies? - What interest rate level would be justified in other key economies, such as the United States or Germany?
¿Qué tipo de interés del bono soberano español a 10 años se justificaría por los fundamentales económicos?
- ¿De qué catalizadores depende?
¿Cuáles serán las principales repercusiones en activos regulados y la economía española, en general?
¿Qué estrategias serían recomendables?
¿Cuál sería el tipo de interés justificado en otras economías clave, como los EEUU y Alemania?

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