* Spain mandates banks to sell new 10-year bond
* Market nervy glut of issuance could be hard to digest
* Bunds slip before German sentiment data
By Emelia Sithole-Matarise
LONDON, May 14 Spanish bonds fell in value on
Tuesday as it launched a new 10-year bond while investor
wariness before German economic sentiment data knocked the Bund
Spain is selling the new bond via a syndicate of banks,
confirming market speculation last week that sparked selling of
its debt on concerns that more issuance in a short time could be
hard for the market to digest.
The syndicated sale comes on the heels of a well-received
bond auction last week and Italy's 8 billion euro sale on Monday
of conventional and floating-rate debt.
Market participants expect it to go smoothly as demand for
higher-yielding euro zone debt continues to be supported by
ultra-easy monetary policies from major central banks.
"We're seeing a little bit of heavy price action based on
rumoured and now confirmed syndication out of Spain. That's
really more a product of how far and how fast we've come here in
the periphery where yields have fallen markedly," said Richard
McGuire, a strategist at Rabobank.
"So investors might be taking some money off the table using
this syndication as a pretext, so the moves are more of a
correction rather than signalling the onset of a bearish trend."
Spanish 10-year yields were last 6 basis
points higher at 4.34 percent, underperforming Italian
equivalents which were 2 bps up at 3.936 percent.
Spanish yields have risen more than 20 basis points since last
The weaker tone in the euro zone periphery did little to
lift German Bunds as investors shied away from putting on big
bets before German sentiment data later in the session.
The Bund future was 11 ticks down at 144.78 with
German 10-year yields up 1.2 bps at 1.37 percent.
The ZEW indicator due at 0900 GMT is likely to show a
recovery in German analyst and investor sentiment in May after a
sharp fall in April, according to a Reuters poll.
Stronger-than-expected macroeconomic reports could cool
expectations of more monetary easing from the European Central
Bank which have supported euro zone bonds in recent days.
"Market positioning is fairly flat after the long
(positions) were shaken out following the sell-off at the end of
last week. People don't have huge positions in case things go
wrong," a trader said.