Spanish Sovereign
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After taking an aggressive approach for its last syndication in January which resulted in a shocking loss of over €75bn of orders, Spain returned to a more moderate and conventional pricing process as it came to the market for a new 50 year bond on Tuesday. -
Spain will lead the public sector borrowers' charge into the primary bond market this week with its second ever 50 year benchmark syndicated deal ahead of the Chinese New Year holiday.
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Few deals have ever had €75bn of orders. Spain managed to lose that much, but still have €55bn remaining in the book. This is the world the ECB’s purchase programmes have built.
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A book of more than €55bn for a €10bn bond priced with a new issue premium of 1bp would be a gratifying outcome for any sovereign issuer. But Wednesday's syndication for Spain instead attracted robust criticism over price moves during bookbuilding which derailed what was on course to be the biggest order book in bond market history.
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In a dramatic and unprecedented turn of events on Wednesday, Spain went from being on track to attract the biggest ever order book for a bond issue to losing more than half of its orders, as it slashed the spread of its new 10 year syndicated bond, leaving either a negative or very skinny new issue premium.
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Spain is planning to issue its hotly anticipated inaugural green bond in the second half of the year through syndication in what will be the first step in the sovereign’s ambition to become a regular green issuer and build out a curve in the format.
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The Spanish Treasury has announced its funding outlook for the year, including a commitment to launch a green bond programme.
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Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, October 26. The source for secondary trading levels is ICE Data Services.
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The Spanish treasury has cut its funding target for the year by €15bn as a result of a better income than anticipated, and said it does not expect to issue any more syndicated bonds before the end of the year.
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Spain’s expected bond syndication, thought to be coming this week, now appears unlikely, according to several SSA bankers.
