Spanish Sovereign
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Sovereign, supranational and agency borrowers were out in force this week, but the second busiest week of the year for euro funding was notable for the lack of price tension on many deals. -
Spain, fresh from its success with a 10 year benchmark on Tuesday, is eyeing a return to the long end of the syndicated inflation linker market towards the end of the year.
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Public sector issuers have streamed back into the primary market in euros after being kept away by weeks of volatility. This week is already the second busiest of the year for the sector, but investors are starting to focus on where interest rates are headed.
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Two euro borrowers launched benchmarks on Wednesday, sharing the SSA euro market. While both secured successful deals, one found the market tougher going, as investors pushed back.
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A pair of borrowers have hit screens for euro benchmarks to be sold during Tuesday’s session, but another nipped in ahead of the rush to price on Monday.
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Sovereign debt officials praised the role primary dealers played during the volatility that hit eurozone government debt markets in the second quarter, though some still feel the system is “not ideal”.
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The Basque Government this week gave one of the best signs that investor worries about Italy’s political situation are unlikely to spill over to other countries as it printed a three times subscribed debut sustainability bond.
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The Basque Government’s return to bond markets on Tuesday after a more than two year absence suggested that investors are not duly concerned about Spain being caught up in volatility last week, with orders ploughing into the debut sustainable bond issue.
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The Basque Government will bring the first real test of investor appetite for Spanish public sector risk since a wave of Italy-led volatility hit the eurozone periphery last week, as it opened proceedings on an inaugural sustainable bond — its first issue of any kind in over two years.
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