Now that the Spanish bond market has realized it has just been primed by senrio debt, the next steps are straight from our Subordination 101 walkthru [4]. Which means sell Spanish local low bonds, go long English-law, preferably, those with a negative pledge. Of course, the presence of a negative pledge is precisely the loophole that will allow Finland, and soon others, to demand a security interest in the event of priming (such as an ESM-sourced loan) which at last check, is precisely what they are doing [5]assuming the EFSF is used to temporarily source the loan until the ESM takes over. So here is a good example [6]of a bond, courtesy of the Generalitat de Catalunya Euro Medium Term Note Programme, that one should hedge a general basket of local-law Spanish bond shorts.
Source: Generalitat de Catalunya (Government of Catalonia) EUR 9,000,000,000 Euro Medium Term Note Programme [6]

