LONDON Jan 22 Spanish yields dipped back
towards eight-year lows on Wednesday as Madrid launched a new
10-year bond which is expected to meet solid demand with large
coupon and debt repayments likely to be reinvested into the
Madrid, which has set up a brisk pace to meet its 2014
funding programme, has tasked a syndicate of banks to sell an
April 30, 2024 bond, a banker close to the sale told IFR
Markets, a Thomson Reuters financial service.
With improved demand for higher-yielding euro zone bonds
spurred by a brighter growth outlook, more positive ratings
reviews and hefty bond repayments, it has been selling bonds
every week since the start of the year.
The syndicated sale comes after an auction of 5.9 billion
euros of 2017, 2026 and 2028 debt last week. Spain plans to sell
133.3 billion euros in medium- and long-term bonds this year, up
from 128.4 billion last year.
Spanish coupon and debt repayments worth 12 billion euros
due in coming days are expected to support demand for bonds.
Some in the market, however, say if the current pace of sales is
maintained next month when bond supply is expected to surpass
repayments, this could see a bit of reversal in the rally.
"With the current environment of still strong support for
the periphery we don't see much concession (in price) built into
the secondary market," said ING strategist Alessandro Giansanti.
"The market is positioning for positive growth and the data
coming out from Spain, the lead indicators, point to a boost in
growth in 2014 ... The upcoming coupon payments and redemptions
will benefit Spain, but in February there's a risk of wider
spreads as there will be less repayments."
Spanish 10-year yields fell 2 basis points to
3.72 percent, just above an eight-year low of 3.65 percent on
Monday. Yields on other lower-rated euro zone bonds were
The yields retreated off the eight-year lows on Tuesday as
speculation Madrid was planning to launch a new 10-year bond
prompted some portfolio adjustments. But analysts say the
limited rise signals resilience in demand for the bonds.
SUPPORTIVE ECB OUTLOOK
"Despite having already fulfilled 9 percent of this year's
targeted bond issuance with a marked amount of ultra-long SPGBs
finding healthy demand, we expect an issuance volume of 6-7
billion euros today," Commerzbank strategists said in a note.
Previous sale amounts of new 10-year Spanish bonds were
around of 5 billion and 7 billion euros in 2010 and last year.
Germany is also due to sell up to 4 billion euros of
two-year paper in an auction seen supported by expectations that
the European Central Bank may loosen policy further.
Two-year yields were steady at 0.17 percent,
having retested six-week lows around 0.63 percent on Tuesday on
the ECB outlook and bets that short-term money market rates will
retreat from recent peaks.