October 27, 2017 / 3:13 PM / a year ago

Spanish sovereign, bank CDS prices rise after Catalonia independence call

LONDON, Oct 27 (Reuters) - The cost of insuring exposure to Spanish sovereign and bank debt rose on Friday after the Catalonian parliament declared independence, sparking worries of a prolonged political crisis.

The upper house of Spain’s parliament on Friday authorised the government of Prime Minister Mariano Rajoy to rule Catalonia directly from Madrid, minutes after the region declared independence from Spain.

Spanish sovereign five-year credit default swaps (CDS) rose 2 basis points (bps) from Thursday’s close to 70 bps, according to data from IHS Markit, following the announcement from the Catalonian parliament.

Lenders Banco de Sabadell and CaixaBank, which have much of their operations in Catalonia, saw their five-year CDS rise 2 and 4 bps after the announcement, to 83 bps and 78 bps respectively. (Reporting by Abhinav Ramnarayan)

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