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26 Feb 2015
Demand for periphery bonds remains strong – Danske Bank
FXStreet (Edinburgh) - Sverre Holbek, Senior Analyst at Danske Bank, assessed the recent auctions in the periphery bond debt market.
Key Quotes
“The demand for the periphery is still very strong as shown by the two auctions yesterday”.
“Spain sold some EUR7bn in a new 15Y benchmark deal with an outright yield of 1.98% and 105bp to mid-swaps. It was oversubscribed almost three times as the order book was above EUR2bn”.
“Portugal sold EUR1.5bn in a tap of the 10Y with a bid-to-cover of 1.82. Initially it had planned to sell only up to EUR1.25bn. Furthermore, the market had rallied into the auction but the performance continued and 10y PGB ended up below 2%”.
“Today, the Italian debt office is in the market, where it is tapping in 5y floater (CCTeu), 5Y BTPS and a new 10Y BTPS - it plans to sell almost EUR9bn, with the bulk in the 10Y benchmark (EUR4.5bn) and EUR2.5bn in the 5Y benchmark. Given the strong demand for Spain and Portugal yesterday we expect that the Italian auctions will be ‘flying’.
Key Quotes
“The demand for the periphery is still very strong as shown by the two auctions yesterday”.
“Spain sold some EUR7bn in a new 15Y benchmark deal with an outright yield of 1.98% and 105bp to mid-swaps. It was oversubscribed almost three times as the order book was above EUR2bn”.
“Portugal sold EUR1.5bn in a tap of the 10Y with a bid-to-cover of 1.82. Initially it had planned to sell only up to EUR1.25bn. Furthermore, the market had rallied into the auction but the performance continued and 10y PGB ended up below 2%”.
“Today, the Italian debt office is in the market, where it is tapping in 5y floater (CCTeu), 5Y BTPS and a new 10Y BTPS - it plans to sell almost EUR9bn, with the bulk in the 10Y benchmark (EUR4.5bn) and EUR2.5bn in the 5Y benchmark. Given the strong demand for Spain and Portugal yesterday we expect that the Italian auctions will be ‘flying’.