EURO GOVT-Spain's benchmark bond rises as it launches new 10-year

Tue Jan 22, 2013 7:58am EST

Related Topics

* Orders, price moves suggest market easily absorbed 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 bonds rose on
Tuesday as the launch of the country's first new bond of that
maturity in more than a year drew strong interest.
    German Bund futures fell 16 ticks to 142.74 after
German ZEW sentiment data came in far above expectations.
    Spain's Treasury expects to sell no more than 7 billion
euros ($9.3 billion) of the new 10-year bond, demand for which
topped 24 billion euros, an economy ministry source said on
Tuesday. The syndicated bond offer closed at 1045 GMT, the
source said.  
    The 10-year sale represents a strong show of confidence in
the country, which last year was widely expected to need a
sovereign bailout. Yields on Spanish debt have fallen sharply
since the European Central Bank pledged in September to buy the
bonds of struggling euro zone states that apply for aid.  
    "The order book is huge ... it has also grown very quickly,"
said Christian Lenk, interest rate strategist at DZ Bank.
"That's a pretty strong result for the Spanish Tesoro."
    Ten-year bonds rose, reversing their previous direction. The
10-year yield fell 3.2 basis points to 5.13
percent. Five-year and two-year yields were flat at 3.70 percent
 and 2.28 percent respectively.
    Ten-year Italian yields were also 3.7 bps
lower at 4.19 percent.
    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 sell the bond via a syndicate of banks was
seen securing demand, while Spain is also expected to continue
benefiting from an environment in which the promise of central
bank support has given investors space 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," said Monument Securities strategist Marc Ostwald.
    At the euro zone's core, German Bund futures fell after the
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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