Spain Sells 4.8 Billion Euros of Bonds, Most Since January
Spain sold 4.8 billion euros ($6.2 billion) of bonds, the most since January, as the Treasury focused on short-term notes that would be targeted for central- bank buying in the case of a bailout.
The Madrid-based Treasury sold 3.94 billion euros of a new three-year benchmark at an average yield of 3.845 percent and 859 million euros of its 10-year benchmark at an average of 5.666 percent. That was the lowest since January and compares with 6.647 percent when it was last sold on Aug. 2.
Bond yields, which have fallen since European Central Bank President Mario Draghi said on Aug. 2 he may buy debt from cash- strapped nations, were little changed from their pre-auction levels. While Prime Minister Mariano Rajoy says he continues to analyze whether to seek the bailout that would trigger ECB debt purchases, his deputy, Soraya Saenz de Santamaria, twice set out arguments in favor of a rescue this week.
“The result is decent, but it doesn’t follow that the market will react positively as it pushes back the timetable,” said Harvinder Sian, a fixed income strategist at Royal Bank of Scotland in London. “A bad auction will push Rajoy to seek a bailout, a good one means he might vacillate again.”
The yield on the benchmark 10-year bond was 5.723 percent after the sale from 5.724 percent beforehand and 5.693 percent yesterday. That pushed the gap over equivalent German securities to 414 basis points from 407 basis points yesterday.
As foreign investors withdraw from Spain, local lenders have picked up the slack, data from the Treasury show. Spanish banks held 32 percent of the outstanding debt in July, up from 17 percent at the end of last year, while non-residents cut their holdings to 34 percent from 50 percent over the same period. Helping fund those purchases, Spanish banks, which are still reeling from real-estate losses, have increased their dependence on ECB financing to record levels, Bank of Spain data show.
To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
Spain Sells 4.8 Billion Euros of Bonds, Most Since January
Angel Navarrete/Bloomberg
The Spanish national flag flies above the Bank of Spain in Madrid.
The Spanish national flag flies above the Bank of Spain in Madrid. Photographer: Angel Navarrete/Bloomberg
Sept. 20 (Bloomberg) -- Bloomberg's Baden Campbell reports on discontent in Spain's Catalan region, where the economic crisis is adding weight to calls for political autonomy. (Source: Bloomberg/APTN/Europe By Satellite)
Sept. 20 (Bloomberg) -- Richard McGuire, senior fixed-income strategist at Rabobank International, discusses Spain's sale of 4.8 billion euros ($6.2 billion) in bonds and expectations the country will request a bailout. He speaks with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Sept. 20 (Bloomberg) -- Luis Garicano, a professor at the London School of Economics, talks about Spain's debt crisis and the prospect of a bailout program run by the International Monetary Fund, European Central Bank and European Union. He speaks with Francine Lacqua on Bloomberg Television's "On the Move." (Source: Bloomberg)
Deputy Prime Minister Soraya Saenz de Santamaria
Angel Navarette/Bloomberg
Deputy Prime Minister Soraya Saenz de Santamaria has twice set out arguments in favor of a rescue this week.
Deputy Prime Minister Soraya Saenz de Santamaria has twice set out arguments in favor of a rescue this week. Photographer: Angel Navarette/Bloomberg
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