MADRID Jan 9 Spain kicked off its 2014 bond
issuance programme with a solid auction on Thursday, beating its
target and cutting its borrowing costs as it tapped into surging
demand for its debt.
The Treasury in Madrid sold a combined 5.29 billion euros
($7.19 billion) of a new 2019 bond and existing paper maturing
in 2028, more than the 4 to 5 billion euros it had aimed for.
Signs that Spain's stuttering economic recovery is gaining
traction, along with a broader revival of interest in peripheral
euro zone debt, helped drive Spanish bond yields to four-year
lows on Wednesday.
That also reflected optimism on financial markets that the
Treasury would easily place the 242 billion euros it said on
Wednesday that it planned to issue in 2014.
Madrid sold 1.76 billion euros of the October 2028 bond at
an average of 4.192 percent, well down from the 4.809 percent
the paper yielded the last time it was auctioned in September.
"The auction was a success," said Banco Sabadell trader Juan
"Beyond the market effect, the most important reading is
that the optimistic economic outlook being reflected in the
lower spreads will enable companies to fund themselves more
In another strong sign of the benign market conditions Spain
is enjoying, state-owned banks Bankia and BMN returned
to debt markets this week.
Spanish and other peripheral sovereign debt has been
underpinned since summer 2012 by a European Central Bank pledge
to support the euro, and investors will look for signals from
the central bank on future monetary actions when it reports the
outcome of its monthly rate-setting meeting later on Thursday.
Spanish 10-year bond yields were slightly up
on Thursday, at 3.726 percent, but still close to their lowest
level of the day before.
The country said on Wednesday it would issue slightly more
debt this year than it did in 2013, but aimed to cut borrowing
costs and broaden its investor base.
Thursday's sale also raised 3.53 billion euros of the
shorter-term bond due in April 2019, at an average yield of
2.382 percent. The bid-to-cover ratio, a indication of demand,
In Paris, France's first sale of long-term debt this year
drew firm investor demand on Thursday although the yield on its
10-year benchmark bond rose slightly from the previous sale two