Spanish Sovereign

Fears that a vote for Scottish independence on Thursday could destabilise Spanish debt seemed to be overplayed on Monday morning, as the sovereign’s debt outperformed the rest of the eurozone periphery ahead of a Bono auction later in the week. Greece and Ireland are set to tap the short end of the curve this week.

This week's scorecard covers the funding progress of selected sovereign issuers. Read on to see which are over the 80% mark.

Spanish 10 year yields fell by the largest month on month amount at auction since September 2012 and the sovereign wiped nearly 50bp from its 30 year borrowing costs on Thursday morning. There was further joy for periphery sovereigns later in the day, with yields falling after a European Central Bank meeting — boding well for a planned Greek seven year bond later in the year.

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.