Regional elections, which have turned into a de-facto independence vote for the breakaway region of Catalonia, have hit Spanish bonds.
The pro-independence coalition is on track to win in Catalonia, albeit perhaps without a majority, in the 27 September vote. Catalan president Artur Mas has vowed to kick off the secessionist measure if he holds the majority of seats.
In a research note, Oxford Economics pointed to political uncertainty as a reason for Spanish bonds waning throughout the year.
The spread versus German bonds rose 30 basis points and 50 basis points when compared with Italian sovereign bonds.
Spanish bonds have trended downwards since July and now offer one per cent on a five-year yield.
Oxford Economics research said yields on the 2020 Catalan bond have surged since mid-July, with the spread versus comparable Spanish bonds more than doubling from 120 basis points in July to 250 points.
The Bank of Spain said the region risks exiting the euro if it chooses independence from Spain, while banks based in the Catalan capital Barcelona also warned against voting for secessionist policies.