Strong Demand at European Debt Auctions
By EMESE BARTHA
FRANKFURT— Spain, Italy and Hungary all carried out successful bond auctions Thursday, as investors showed strong demand for the bonds following Portugal's better-than-expected bond auction on Wednesday.
But the results failed to dispel worries about debt levels in the euro zone's fiscally frail countries, as investors focused on the higher yield Spain had to pay and the potential for weaker demand at the next round of bond sales.
Both Spain and Italy sold the maximum intended amounts they had planned, with Spain selling €3 billion ($3.94 billion) of a five-year bond and Italy selling €6 billion in five- and 11-year bonds. A person familiar with the Spanish placement said more than 60% of the amount sold was placed with foreign investors.
Spain's Treasury sold the bonds at an average yield of 4.542%, up from 3.576% at the previous auction Nov. 4, but lower than the prevailing level of around 4.600% in the secondary market around the time of the auction.
But the higher yield Spain paid Thursday, and Portugal paid Wednesday on its €1.25 billion bond auction, underlined that investors remain worried about their ability to finance their needs. "A handful of good results merely covers up rather than solve Europe's underlying problems and we continue to look at repayment burdens coming up in future months as potential trigger points for further volatility," said Sean Maloney, a strategist at Nomura International in London.
Hungary, which launched two series of bonds maturing in August 2014 and June 2022, besides reopening the February 2016 bond, sold 55 billion Hungarian forints ($259.5 million) of the bonds, more than the planned 45 billion forints. The average yield on the five-year bond fell to 7.62% from 7.91% from two weeks ago.
While demand wasn't exceptionally strong, "the results should be considered as successful, with the average yields around [0.1 percentage] points below the preceding day's secondary-market levels," said Sandor Jobbagy, senior analyst at CIB Bank in Budapest.
Mr. Jobbagy said several market participants have adopted a wait-and-see stance as they are looking forward to the announcements of fiscal policy actions of the government, due in February, that should reveal restructuring measures and spending cuts.
.
Associated Press
A statue which depicts a woman holding up the symbol of the euro is seen at the European Parliament in Brussels.
But the results failed to dispel worries about debt levels in the euro zone's fiscally frail countries, as investors focused on the higher yield Spain had to pay and the potential for weaker demand at the next round of bond sales.
Both Spain and Italy sold the maximum intended amounts they had planned, with Spain selling €3 billion ($3.94 billion) of a five-year bond and Italy selling €6 billion in five- and 11-year bonds. A person familiar with the Spanish placement said more than 60% of the amount sold was placed with foreign investors.
Spain's Treasury sold the bonds at an average yield of 4.542%, up from 3.576% at the previous auction Nov. 4, but lower than the prevailing level of around 4.600% in the secondary market around the time of the auction.
Italy sold its five-year bond at a yield of 3.67%, up from 3.24% on Nov. 12, while the yield on the longer bond rose to 5.06% from 4.81%. But Italy's auction yields remained below secondary market levels of around 3.776% and 5.159%, respectively, shortly before the auction. The bid-to-cover ratio, an indicator that shows how demand compared to the amount sold, was 2.1 in Spain's auction, compared with 1.6 previously.
The tailwinds of Portugal's decent bond auction Wednesday proved to be a positive factor, setting up a suitable backdrop for Thursday's debt offerings, analysts said. "The market may enjoy a short breather [now that] the first round of non-core euro-zone government bond supply is off the table with maximum amounts sold without major hiccup," said David Schnautz, a strategist at Commerzbank in London.
But the higher yield Spain paid Thursday, and Portugal paid Wednesday on its €1.25 billion bond auction, underlined that investors remain worried about their ability to finance their needs. "A handful of good results merely covers up rather than solve Europe's underlying problems and we continue to look at repayment burdens coming up in future months as potential trigger points for further volatility," said Sean Maloney, a strategist at Nomura International in London.
Hungary, which launched two series of bonds maturing in August 2014 and June 2022, besides reopening the February 2016 bond, sold 55 billion Hungarian forints ($259.5 million) of the bonds, more than the planned 45 billion forints. The average yield on the five-year bond fell to 7.62% from 7.91% from two weeks ago.
While demand wasn't exceptionally strong, "the results should be considered as successful, with the average yields around [0.1 percentage] points below the preceding day's secondary-market levels," said Sandor Jobbagy, senior analyst at CIB Bank in Budapest.
Mr. Jobbagy said several market participants have adopted a wait-and-see stance as they are looking forward to the announcements of fiscal policy actions of the government, due in February, that should reveal restructuring measures and spending cuts.
.
0 comments:
Publicar un comentario