The Spanish Treasury has tapped the sovereign debt market for the first time this year and was greeted with a successful outcome. Spain issued bonds for 5.82bn euros, well above its target range of 4-5bn euros.

The Treasury raised €1.95bn in five-year bonds at a maximum yield of 4.033% compared to 4.769% in the prior auction. The bid-to-cover rate was 2.59.

It also raised €3.397bn in 2-year bonds at a yield of 2.587%. The bid-to-cover ratio was 2.07.

Finally, it raised €470m with the issuance of longer-dated 13.5-year bonds maturing in 2026. These bonds called for a maximum yield of 5.569% compared to 6.218% in the prior auction. The bid-to-cover ratio was 2.85.

Spanish 10-year yields on the secondary market dropped below 5% for the first time since March 2011: the borrowing rate on the a benchmark Spanish note was down 15.2 basis points at 4.986% on the day.

Market analyst Michael Hewson from CMC Markets said in an e-mail this morning: "It would appear that the 'Draghi Put' is alive and kicking hard in European bond markets".


SC

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