After a quarter point cut in interest rates by the ECB.
That risk premium Spain (profitability differences between bono espaol to say and Germany, which is considered the safest) has fallen below 70 basis points this Friday, the lowest level since January 2022.
This decline occurred after the European Central Bank (ECB) Governing Council's decision to cut interest rates by a quarter of a point, which was the third reduction this year and the second in a row.
The profitability of the Spanish reference bond is 2.87% in the secondary market, compared to 2.19% in the German market, which provides an advantage risk premium of 68 basis points.
The yield on Spanish debt is still below what investors demand from France (2.90%) and, therefore, the risk premium is lower (69 basis points for Spain; and 71 basis points for France).
The risk premium is French debt surpassed Spain on September 26, something that hasn't happened since 2007.
Although these movements correspond to the secondary market, where already-issued securities are traded, the risk premium determines the costs each state must bear to finance its debt.
Analysts assume that the ECB will settle for a new rate cut given the weak European economy.