Spain's first 2013 bond sale exceeds target
2013-01-10 17:34:43
Spain had a successful start to its 2013 funding, with the country's first debt sale of the year on Thursday exceeding the maximum target.
The country raised EUR 5.8 billion from the sale of its three bonds which included a new two-year bond. The treasury had targeted proceeds between EUR 4 billion and EUR 5 billion.
The new two-year bond carries the so-called Collective Action Clause, or CAC, which was made compulsory under the ESM treaty for all euro area government securities with maturity above one year issued after January 1. The clause allows a majority of bondholders to allow debt writedowns despite opposition from other bondholders.
The 2.75 percent March 2015 bond fetched a yield of 2.476 percent, while the bid-to-cover ratio was 2.07. Previously, the country sold a bond with similar maturity on October 4 last year that had a yield of 3.282 percent and demand equating to 2.03 times the offer.
The yield for the five-year bond due in January 2018 fell to 3.988 percent from 4.680 percent at a previous sale on November 8. Demand was 2.89 times the offer, better than 1.57 times at a previous sale.
A long-term bond due July 2026 with a coupon of 5.90 percent fetched a yield of 5.555 percent and a bid-to-cover ratio of 2.85.
On Tuesday, the Spanish Treasury announced that the central government net funding requirement this year would be EUR 71 billion. The agency plans a total debt issuance of EUR 121.3 billion, which is 7.6 percent more than last year.
Analysts view today's auction results as a signal that markets do not see an immediate need for Spain to seek an EU/IMF bailout. That said, the country may eventually have to ask for a rescue as the budget cuts start to bite amid a severe recession.