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Spain Bond Sale Exceeds Target

Spain raised a bigger-than-targeted amount at a bond auction on Thursday at lower costs as investor sentiment improved after the country successful met its funding requirements for this year.

Raising funds for next year, the Spanish Treasury sold EUR 3.88 billion bonds, which was larger than its maximum target of EUR 3.5 billion. The agency auctioned bonds maturing in 2015, 2017 and 2021.

The yield on the October 2015 bond with a coupon rate of 3.75 percent dropped to 3.617 percent from 3.660 percent in the previous sale on November 8. The bid-to-cover ratio fell to 2.09 from 2.83.

The 5.5 percent July 2017 bond was placed to yield 4.477 percent, which was less than the 4.766 percent it fetched in the previous sale on October 4. Investors bid 2.61 times the offer, better than 2.47 times last month.

The longer-term bond maturing in April 2021 with a coupon rate of 5.5 percent was auctioned for the first time since December last year. The yield dropped to 5.517 percent from 5.545 percent. Demand was 1.77 times the offer versus 2.16 times in December last year.

Separately, the Spanish Treasury said it sold EUR 3.3 billion bonds due September 2017 to the state social security reserve fund via private placement.

With uncertainty prevailing over whether the Prime Minister Mariano Rajoy led government would opt to request for a EU-IMF sponsored bailout for the Spanish economy, the treasury is prefunding for next year as it completed the bond issuance for 2012 this month.

In the event of a bailout request from Spain, the European Central Bank has said it will intervene in the market to buy Spanish bonds to help bring down the borrowing costs of the country.

by RTT Staff Writer

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