Bonds News

UPDATE 5-Belgium raises just 3 bln with 10-yr bonds

* Belgium sells 3 bln euros of 10-year syndicated bond

* Compares with 4-5 bln euros in previous years

* Follows Spanish 6- bln euro syndication on Monday

* Belgian, Spanish T-bill yields fall, Greece stable

(Updates with comments, pricing, Portugal confirming T-bill)

By Philip Blenkinsop

BRUSSELS, Jan 18 (Reuters) - Belgium scored only limited success with a 10-year bond sale via banks on Tuesday, a day after fiscally stretched euro zone peer Spain took greater advantage of a dip in borrowing costs.

Belgium, under market scrutiny over government debt almost as large as its annual economic output and politically deadlocked for seven months, raised only 3 billion euros ($4 billion) from the sale, the country’s debt agency said.

That compares with the 4 billion or 5 billion euros raised in each of the past five years from new 10-year bonds.

“The market was quite calm on the back of a good transaction for Spain,” debt agency director Anne Leclercq told Reuters, but she said some would-be buyers dropped out after mixed messages from EU finance ministers on expanding the euro zone bailout fund.

EU finance ministers discussed the possibility of enlarging the euro zone bailout fund, from which Ireland has already drawn, but delayed taking any decision. [ID:nL3E7CI0C4]

“The window started clear, but it became it bit opaque,” Leclercq added. Earlier in the day, order books had reached some 7 billion euros.

The bond ended up with a 4.25 percent coupon and priced at 98.971 or mid-swaps plus 93 basis points, at the top of the indicated range of plus 90 to 93.

Belgium is the latest highly indebted euro zone state to take advantage of more benign market conditions. Spain sold a 10-year bond via a syndicate on Monday, while Portugal said it also plans a syndicated placement this quarter. [ID:nLDE70G0T8]

Analysts said it had failed to match the Spanish success.

“It’s rather a disappointment,” said Commerzbank interest rate strategist David Schnautz.

He added that Spain, unlike Belgium, had given a “little present” to investors in terms of pricing of its bond.

Borrowing costs have fallen in the past week on talk of an expanded euro zone bailout fund, heavier buying of government bonds by the European Central Bank and successful bond auctions in Portugal, Spain and Italy.

Piet Lammens, head of global markets research at KBC, said debt agencies had been wise to move quickly.

“If another crisis pops up, they will be in a far better condition than if they hadn’t issued now.”

Portugal confirmed that its 12-month T-bill would go ahead as planned on Wednesday.


Shorter-term treasury bill auctions on Tuesday confirmed that borrowing conditions for struggling euro zone peripheral states had improved.

Belgium issued 3.156 billion euros of paper, at the top end of its target range and the lowest cost since last October, while Spain auctioned 5.5 billion euros of T-bills at yields lower than in December. [ID:nTAR001850] [ID:nLDE70H0RU]

Greece, the first recipient of a euro zone bailout, sold three month T-bills at the same yield achieved in November. Foreigners bought some 80 percent of that issue.

“The idea the crisis would lead to one country falling after another seems to have been broken,” said Nicolas Lopez, economist at Madrid-based brokerage M&G Valores. “I think we’re heading toward a permanent improvement of the situation.”

UniCredit’s strategist Chiara Cremonesi acknowledged the Spain and Greek T-bill auctions went well, but was less upbeat.

“This should keep the market mood on the positive side for the time being. Once again, we take the current optimism with a pinch of salt as the underlying sentiment is still fragile and EMU woes are still there,” she wrote in a note.

Lead managers for Belgium’s new 10-year issue said the order book had opened at mid-swaps plus 90 to 93 basis points. The bond, which matures on Sept. 28, 2021, is being placed via bookrunners BNP Paribas Fortis, RBS, SGCIB and UBS.

Countries use syndication to access a wider investor base, which should help secure a larger issue size, more aggressive pricing and increased secondary market liquidity. Spain received 9 billion euros of orders for its 6 billion 10-year bond, which priced late on Monday at a spread of 225 basis points over mid-swaps, or 256.4 basis points over the benchmark German bund.

But the risk premium was higher than for a similar 6 billion euro, 10-year issue sold on July 6, which priced at mid-swaps plus 195 basis points, reflecting fears the euro zone debt crisis might force Madrid to seek an Irish-style bailout.

The Belgian debt agency has cancelled an OLO bond auction that had been scheduled for Jan. 31.

Belgium entered January having already bought back 6.5 billion euros of 2011 bonds with money raised last year. It plans to issue 34 billion euros of bonds this year, significantly less than the 40.85 billion euros issued in 2010. (Additional reporting by Ben Deighton in Brussels, Andrei Khalip in Lisbon, Paul Day in Madrid and George Georgiopoulos in Athens, Emelia Sithole-Matarise and Alex Chambers in London; Editing by Catherine Evans/Patrick Graham/Susan Fenton)