Spain has asked data providers to switch bonds used for pricing its benchmark debt, in an unexpected move that has pushed quoted yields sharply below last week’s euro-era highs, the FT reports. Just a day after borrowing costs soared in a lacklustre auction, the yield on 10-year Spanish debt, which moves inversely to prices, dropped by about 35 basis points on Friday, mystifying traders. However, it has emerged that Thomson Reuters and Bloomberg, the main providers of government bond price data, were asked by the Spanish Treasury to change the main quoted benchmark price, from the new 10-year bond launched on Thursday back to an older one. After the difficult sale of new debt, in which Spain paid the highest yield since 1997 in an issue of 10 year bonds, the Treasury sent a request marked “urgent” on Friday morning, asking the data providers to restore the older bond as the benchmark. This decision reversed a request made before the auction. The yield on the old bond was trading on average about 35 basis points lower. “The Spanish have clearly seen yields are higher on the new benchmark and decided to go back to the older one. It is a farce and shouldn’t be allowed,” said one trader.

This entry was posted by Izabella Kaminska on Tuesday, November 22nd, 2011 at 10:05 and is featured in The Lunch Wrap (22 Nov 2011) . Tagged with bloomberg, bonds, Spain, Spanish Treasury, Thomson Reuters. Edit this entry.