Spain’s economy made historic headlines on Wednesday: European Commissioner for Economic and Monetary Affairs Olli Rehn pointed out that Spanish banking sector bail-out has performed successfully, and head of Fitch Sovereign Group Douglas Renwick remarked external confidence in Spain improvement- both also warned about the long time it will take the country to recover employment-. Which is more important, it was the official day of Spanish banking system credit line cancellation, as well as of a milestone for the country’s Treasury: a record 10-year syndicated bond issue amounting €10 bn.
Never before the country had sold such an amount in just one day. The syndicated bond sale was strongly oversubscribed by almost four times the sum on offer, just beaten by €44bn of EFSF’s first issue. Near 65% of the bonds were sold to foreign investors. Moreover, the Spanish debt issue was the largest in euro zone history for a syndicated sovereign bond.
The issue’s spread reached to 178 basis points above mid swap reference index, which is equivalent to a 3.84% yield, and consequently a premium of 3.74% priced on Wednesday at secondary market. “This 3.74% coupon contrast with 5.4% and 4.4% of 2013 January and March issues’, while 178 basis points spread near 200 and 100 b.p under those sales”, according to Santander’ analysts team.
Furthermore, experts at Afi also explain last Spanish bond issue’ success is due to the fact that “in a context of large liquidity, and minimum euro interest rates but a presumable increase of these in next quarters, investors continue to look for attractive bond sales which provides wider protection”.
The Spanish Treasury has already covered, including Wednesday syndicated one, 16.6% (€22,1bn) of 2014’s issues.