DBRS Spain Commentary: Article 155: Unprecedented and untested risks

DBRS Ratings Limited (DBRS) published a commentary on the Kingdom of Spain titled: ‘Article 155: Unprecedented and untested risks’.

Summary highlights of the commentary include:

• DBRS expects uncertainty to remain elevated ahead of the potential snap elections in the region, which will set the tone of future discussions between the central and regional governments.

• DBRS’s baseline scenario remains that of unity for the Kingdom of Spain over the medium term. However, in the less likely scenario that pro-independence parties reinforce their majority in snap elections, there is a high risk that the constitutional crisis continues.

• The ultimate impact of the institutional crisis on the economy and public finances will depend on its duration and depth. Nevertheless, given the strong growth inertia in Spain, DBRS expects this impact to remain manageable at present and currently sees it unlikely to derail the central government’s fiscal consolidation process.

• Banks have been increasing their covered bond issuance to strengthen their funding and liquidity profiles.

The commentary is available at www.dbrs.com.

For more information on the Kingdom of Spain, visit www.dbrs.com or contact us at info@dbrs.com.