Recently approved measures allow the separation of principal and coupons of certain issues of Spanish government debt, as well as their subsequent reunification. These measures provide greater liquidity for the government debt market, as well as increasing the supply of this type of securities, allowing each investor to better tailor his or her investment portfolio to his or her needs in terms of principal, maturity and yield. Both individuals and corporate bodies can own these separated securities.
The first such separations allowed are those of government bonds and debentures. The separable or non-separable status of these securities will be set forth in the official announcement of their issue, so separable and non-separable bonds and debentures will co-exist on the market. Separable securities will be represented by book entries under a specific securities code number, and will be negotiable on the market on the same conditions as the bonds from which each one is separated.
The principal and separated coupons are securities with an implicit yield, equivalent to the cash-flow of the separated bond. The face value of each separated principal is Pta10 million (US$67,000), while that of each coupon is Pta1 million. Each transaction for the separation or reunification of separable bonds must involve a minimum fact value of Pta50 million, though subsequent additional separations may be carried out in increments of Pta10 million.
Separated coupons with the same maturity date are considered fungible, even though they may originate from different separable bond issues. However, principals will only be deemed fungible if they are from the same issue of bonds. Coupons and separated principals are never considered fungible with each other.