Spanish Sovereign

Community of Extremadura sold its largest ever bond with its debut syndication on Wednesday, a day before the Spanish sovereign auctions debt.

Yields on the only two eurozone periphery countries scheduled to sell debt this week held steady on Monday, as an escalating crisis in Ukraine led to a rally in safe haven debt and raised worries of contagion into the periphery.

Read on to see how deals priced earlier in the year 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.

A remarkable start to the year for the eurozone periphery is in clear view in this month's sovereign funding scorecard. Just two months into the year, Portugal has completed more than half of its target, while Ireland is not far behind. At the other end of the volume spectrum, Spain is making good headway in tackling its €133.3bn target with 26% completed, while Italy — which has yet to sell a syndication this year — is behind on 18%.

Portugal relieved a little of its redemption pressures ahead of its expected exit from a bailout programme later this year, buying back €1.3bn of debt maturing over the next two years on Thursday. Meanwhile, Italy paid 2005 prices to open a new 10 year line and printed five year debt at a euro-era low yield, as the compression in peripheral eurozone spreads since new year showed no signs of slowing — and may even have received a boost from tensions in eastern Europe.

Spain has thrown open another door closed to it during the eurozone sovereign debt crisis after selling its first Schuldschein since 2010, SSA Markets can reveal.

The pools of liquidity available to Spanish issuers is growing steadily, as the Community of Castile and León drew more international demand for a 10 year bond than regional neighbour Madrid achieved just two weeks ago — and the Spanish sovereign accessed new investors through a Schuldschein placement.

Castile and León made the best possible return to the syndicated bond market after a 15 month absence on Tuesday, more than doubling its record volume and pricing at a spread tighter than where its neighbour Madrid priced a deal of similar tenor just two weeks ago.

Castile and León is set to become the first Spanish issuer to take advantage of an upgrade for the Spanish sovereign, after mandating banks for its first syndication in two years. Across the border, Portugal — which analysts view as a major beneficiary of Spain’s upgrade — is set to buy back debt later this week in a move that could help it make for a clean break from its Troika bailout package.

Read on to see how deals priced earlier in the year 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.

The peripheral eurozone recovery ride gained more momentum on Thursday, as Spain’s 10 year yields tumbled at auction to levels last seen in the middle of the last decade. A day earlier, the Community of Madrid printed its second super long dated private placement in a week while Portugal sold short term paper at its lowest yields since late 2009.

Spain set out its stall for a sale of medium to long term debt later in the week in the best possible fashion on Tuesday, printing short term bills at historical lows.