Greek pressures weigh on Spain debt auction
Thu Jun 16, 2011 5:45am EDT
* Treasury sells 8-, 15-yr paper at low end of target
* Pays high yields as sale overshadowed by Greek ills
* Treasury now issued over 50 pct of 2011 issuance
*
France sells 8 bln euros in bonds, well received
(Adds details, comment)
By Nigel Davies
MADRID, June 16 (Reuters) - Spain had to pay investors a handsome price in the latest test of demand for its debt on Thursday as market tensions over an expected new rescue package for
Greece approached fever pitch.
The Treasury sold 1.3 billion euros of a 2019 bond last auctioned in Dec. 2009, and 1.5 billion euros of a 15-year bond last issued via syndication in March. The total was below the middle of its 2.5-3.5 billion euro target.
The bonds were reasonably well received despite a fraught week for
euro zone periphery debt, which saw yields on Spanish 10-year bonds soar to 11-year highs on Thursday as politicians struggled to agree on a plan for staving off a Greek default.
The average yield on the 2019 bond was 5.352 percent, and it was 6.027 percent on the 2026 bond, roughly in line with the secondary market.
"Overall it's a pretty decent auction in a tough market environment with all eyes on Greece," said Nishay Patel, debt analyst at Citi.
Separately, France sold 8 billion euros of bonds, which drew good demand from investors seeking shelter from countries at the fringes of the euro zone.
Spain has not faced problems selling its debt this year, but is remains prey to contagion from weaker countries at the fringes of the euro zone as it continues work to slash its own public deficit in an environment of weak economic growth.
Yields on its ten-year benchmark bond were around 5.62 percent just after the auction but quickly rose to 5.72 percent, tracking gains in other peripheral yields as a flight towards safe-haven assets gathered pace.
The key spread between Spanish 10-year debt and benchmark German Bunds was around 278 basis points, up around 18 bps on the day and at its highest since January. ES10YT=TWEB DE10YT=TWEB
Spain's Treasury has now sold 48.4 billion euros, or around 51.5 percent of its total gross debt issuance for the year.
Despite that, analysts retain concerns over Spain's ability to keep financing its debt at such high levels.
"At least this is another funding hurdle cleared by Spain, but it is coming at increasing price and therefore an easing of the euro debt crisis is needed for Spain to remain on track with its issuance programme," said Orlando Green, strategist at Credit Agricole.
The bid-to-cover ratio on the 2019 bond was 2.1, and it was 2.6 on the 15-year bond.
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Crescono i rendimenti...
Come dico sempre, il liquido in un modo o nell'altro bisognerà tirarlo fuori. Meglio darlo direttamente alla Grecia e si risolve il problema.