Spanish Sovereign

Spain gave the average life of its debt a hefty shunt out the maturity curve on Monday, raising €1bn with a 50 year private placement — its longest dated deal since the introduction of the euro. But the sovereign has not finished with its supply ambitions for the week: it has more long dated Bonos available at auction on Thursday.

Eurozone periphery sovereigns had the best possible start to the traditionally busy funding period of late August and September, after comments from European Central Bank president Mario Draghi helped push down their yields in secondaries.

Eurozone periphery sovereigns could squash down their short term borrowing costs even further than they have managed so far this year, as dovish measures from the European Central Bank and a drop in supply support the issuers’ debt performance, according to analysts. Spain and Portugal could benefit from the trend at bill auctions later this week.

This week's scorecard covers the funding progress of sovereign issuers, with all of the eurozone periphery comfortably ahead in their programmes despite some wobbles in secondaries over the past month.

Eurozone periphery sovereigns enjoyed a boon ahead of bill auctions next week, as their spreads tightened versus Bunds on Thursday morning — despite German yields hitting record lows — following miserable growth revealed in second quarter GDP data for the currency bloc.

Spain ratcheted down its borrowing costs in the five year and 10 year parts of the curve at auction on Thursday, with the sovereign possibly benefiting from its ever rosier economic outlook compared with its eurozone periphery peer Italy.

Portugal’s bond yields dropped in secondaries on Monday, along with most other eurozone periphery countries, after the Bank of Portugal’s decision over the weekend to split Banco Espírito Santo into a good bank — which will receive an injection of public funds — and a bad bank. While Portugal has no scheduled debt sales until a bill auction on August 20, Spain and Greece are both in action this week — and bankers are also predicting syndications for the periphery in a few weeks.

Span sold nine month bills at its lowest ever yield on Tuesday, but in spite of the meagre returns on offer found strong demand for its paper.

This week's scorecard covers the funding progress of sovereign issuers, with all of the eurozone periphery comfortably ahead in their programmes despite some recent wobbles in secondaries.

Spain boosted its maturity profile and pushed down its borrowing costs on Thursday, auctioning €1.021bn of July 2032 bonds at a yield lower than where it last sold bonds of a similar tenor two months ago.

Spain and Greece shook off a sell-off in their paper last week to push down yields at bill auctions on Tuesday. The result augured particularly well for Spain, which sells longer dated paper later in the week.

Read on to see how selected benchmarks are faring in secondary. Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark as of Thursday's close. The source for secondary trading levels is Interactive Data.