Spain plans to sell 59 billion euros ($77 billion) of bonds after maturities in 2013 to finance the euro-region’s second-largest budget deficit.
Net bond issuance for this year compared with net sales of 62.7 billion euros least year and an initial target of 35.8 billion euros for 2012, Spain’s Treasury chief, Inigo Fernandez de Mesa, told reporters in Madrid today. Gross issuance will reach 215 billion euros to 230 billion euros and include 23 billion euros in financing for Spain’s regions, he said. That compares with 249.6 billion euros in gross issuance last year, he said.
Spain holds its first debt sale of 2013 on Jan. 10 as it girds for 159.2 billion euros of redemptions this year. Prime Minister Mariano Rajoy’s one-year-old government is trying to avoid requesting aid from the European Central Bank to lower its borrowing costs and tame a budget gap that the European Commission puts at 8 percent of gross domestic product.
Rajoy has pledged to trim the shortfall to 4.5 percent of GDP this year.
The Treasury plans to have net bill sales of 12 billion euros and will introduce a new, nine-month bill, while dropping its 18-month note, Fernandez de Mesa said.
The yield on Spain’s 10-year benchmark bond fell 2 basis points to 5.09 percent at 11:35 a.m. in Madrid, narrowing the spread with similar German maturities to 357 basis points. That compares with a euro-era high of 7.75 percent on July 25, before ECB President Mario Draghi pledged to save the euro with a bond purchase program known as OMT.
The “anemic growth outlook for 2013 is a big hurdle and makes it likely that Spain may have to request activation of the OMT,” said Fadi Zaher, head of fixed-income sales and trading for Barclays Wealth and Investment Management in London. “Concerns about debt sustainability won’t vanish overnight.”
Spain is rated one level above junk by Standard and Poor’s and Moody’s Investors Service, and two levels higher by Fitch Ratings.
The Treasury, which plans to sell as much as 5 billion euros in bonds maturing in 2015, 2018 and 2026 on Jan. 10, estimated that the total debt stock would reach 759.7 billion euros at the end of 2013, compared with 688.2 billion euros at the end of 2012.
Rajoy has pledged to trim the shortfall to 4.5 percent of GDP this year.
The Treasury plans to have net bill sales of 12 billion euros and will introduce a new, nine-month bill, while dropping its 18-month note, Fernandez de Mesa said.
The yield on Spain’s 10-year benchmark bond fell 2 basis points to 5.09 percent at 11:35 a.m. in Madrid, narrowing the spread with similar German maturities to 357 basis points. That compares with a euro-era high of 7.75 percent on July 25, before ECB President Mario Draghi pledged to save the euro with a bond purchase program known as OMT.
The “anemic growth outlook for 2013 is a big hurdle and makes it likely that Spain may have to request activation of the OMT,” said Fadi Zaher, head of fixed-income sales and trading for Barclays Wealth and Investment Management in London. “Concerns about debt sustainability won’t vanish overnight.”
Spain is rated one level above junk by Standard and Poor’s and Moody’s Investors Service, and two levels higher by Fitch Ratings.
The Treasury, which plans to sell as much as 5 billion euros in bonds maturing in 2015, 2018 and 2026 on Jan. 10, estimated that the total debt stock would reach 759.7 billion euros at the end of 2013, compared with 688.2 billion euros at the end of 2012.
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