(Adds background, investor comment)
By John Geddie
LONDON, Feb 19 (IFR) - Spain is preparing to issue a bond
denominated in US dollars, possibly as early as this week,
market sources said on Tuesday.
The eurozone peripheral sovereign, rated Baa3/BBB-/BBB, is
working to get the appropriate documentation in place for a
possible five-year deal, building on feedback from US investors
during a roadshow last week.
"It seems like Spain wants to have a crack at dollars," said
one bank origination official.
"It makes sense because our sales force in the US is saying
there is definite interest for a dollar deal out of Spain."
Another market source said that Spain was looking but did
not think it had yet awarded a bond mandate. A spokesperson for
the Spanish Ministry of Economy and Finance declined to comment.
The dollar market will enable Spain to diversify its
investor base and tap into the largest community of yield-hungry
emerging markets funds.
Eurozone peer Slovenia managed to do exactly that late last
year, issuing a USD2.25bn 10-year bond in line with where its
equivalent euro bonds were trading.
But while Slovenia was forced to dollars after euro
investors shunned the country, Spain finds itself in a much
Spain has already made significant inroads into its hefty
EUR120bn funding programme for 2013, raising EUR22bn via a
syndicated 10-year bond and a handful of auctions.
"It will be a sideshow, an opportunistic deal to relieve a
bit of funding pressure...but Spain still need to be cognisant
of the need for support from their home market," said a
sovereign bond portfolio manager at a London-based fixed income
"That said, if it came at the right levels and was
attractively priced we would definitely look at investing in a
dollar deal from Spain," he added.
Spain last issued a dollar-denominated bond back in
September 2009 - a USD2.5bn 3-year priced at mid-swaps plus 18bp
via Barclays, Credit Suisse and Goldman Sachs.
(Reporting by John Geddie; editing by Alex Chambers)