EURO GOVT-Spain yields steady as launches new 10-year bond

Tue Jan 22, 2013 5:42am EST

Related Topics

* Price moves suggest market easily absorbing supply
    * Spain's first new 10-year benchmark since November 2011
    * Bunds fall after strong ZEW economic sentiment data


    By Ana Nicolaci da Costa
    LONDON, Jan 22 (Reuters) - Spanish 10-year yields held
steady on Tuesday as the launch of the country's first new bond
of that maturity in over a year drew early strong interest.
    German Bund futures fell 20 ticks to 142.70 after
German ZEW sentiment data came in far above expectations.
    Spain has got off to a flying start to its funding this year
as abundant liquidity and the prospect of European Central Bank
support underpinned appetite for its debt. 
    The 10-year sale, via syndication, represents a strong show
of confidence for the country, which only last year came near to
needing a sovereign bailout.
    "Sentiment is positive for peripheral markets as we saw last
week with Italy's 15-year syndicated sale. We can expect it will
go fine," Alessandro Giansanti, senior rates strategist at ING
said.
    Ten-year Spanish yields were about one basis
point lower at 5.16 percent. Five- and two-year yields were
slightly higher at 3.72 percent and 2.32 percent
 respectively.
    Spain's Treasury hopes to raise at least 3 billion euros ($4
billion) through the placement of the 10-year bond, and could
shift upwards of 4 billion if the transaction went well, a
government source said on Tuesday. 
    It set the final price on the bond at midswaps plus 365
basis points, booking interest in excess of 17 billion euros, a
source told IFR, a Thomson Reuters news and market analysis
service.
    Madrid's sale follows Rome's successful 6 billion euro sale
last week of its first 15-year bond in more than two years.
    The decision to do the sale via syndicate was expected to
secure demand, while Spain should still benefit from an
environment where the pledge of central bank support had allowed
investors the luxury to seek returns.
    "I think people will look at the carry that's there... and
in the current mood there will be more than enough people out
there who will be willing to chase (yields), plus the
domestics," Marc Ostwald, strategist at Monument Securities
said.
    Among core euro zone debt, German Bund futures fell after
the Mannheim-based ZEW think tank said its monthly poll of
economic sentiment rose to 31.5 points from 6.9 in December,
beating a median forecast for 12.0 points in a Reuters poll of
37 economists.
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