(Corrects spread to bunds in second paragraph.)
Austria issued 4 billion euros ($5.2 billion) of bonds maturing April 2022 with the nation paying the highest borrowing costs among top-rated euro nations.
The notes were priced to yield 23 basis points more than the benchmark mid-swap rate, or 52.2 basis points over similar- maturity German government debt. Austria’s shorter-dated, existing benchmark 10-year bond pays 48 basis points more than bunds, with France, the next highest AAA ranked country, at 37 basis points, Bloomberg data show.
“We had an order book of more than 8.5 billion euros, it went very, very well,” Martha Oberndorfer, the head of the debt agency, said from Vienna. Many of the orders for the deal were from Europe, she said, but couldn’t immediately provide a break- down of the allocation.
Austria was competing to raise funds this week amid concern the sovereign debt crisis is deepening. Germany raised about 7 billion euros in bonds today while Portugal sold 1.25 billion euros of securities. Spain will auction 3 billion euros of five-year debt tomorrow, while Italy will market 6 billion of bonds due in 2015 and 2026.
Austrian bonds beat their euro-zone counterparts last year, returning 6.9 percent, compared with a 6.3 percent gain from German debt and a 20 percent loss from Greek bonds, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies.
The extra yield investors demand for holding Austrian instead of German bonds is still the highest among the five top- rated non-German issuers in the euro zone. That spread started to widen two years ago amid lingering concern that Austrian banks’ investments in eastern Europe may go bad and require massive state bank bailouts.
Erste Group Bank AG, UniCredit Bank Austria AG or Raiffeisen Bank International AG expanded for two decades in the Austro-Hungarian empire’s former hinterland, buying local banks in nations including Ukraine, Romania and Croatia. They have the most outstanding loans in eastern Europe as a percentage of national output among all of Europe.
The spread of Austrian 10-year debt over German bonds peaked in February 2009 at 137 basis points, at the time surpassing that of Italy.
Today’s bond sale was managed by BNP Paribas SA, Deutsche Bank AG, Erste Group, HSBC Holdings Plc and Societe Generale SA.
To contact the editor responsible for this story: Paul Armstrong at Parmstrong10@bloomberg.net