(Bloomberg) – Investors placed record orders for Spanish government bonds on Wednesday, continuing a huge bond sale in European markets in early 2024.
The 10-year bond offering through banks received bids worth more than 130 billion euros ($142 billion), people familiar with the matter said. That shattered the all-time high set nearly four years ago at the height of the pandemic, when investors were scrambling for safe-haven assets.
The order frenzy is in line with trends this week, when a Belgian bond, a dual-tranche Italian bond issue and two British bond sales all recorded historic demand. This may allay concerns that a large supply of government debt to finance the 2024 budget deficit could derail the recent bond rally, but some sellers are using sweeteners to lure buyers. There are signs that they are offering it.
“Most of the deals are very well received, but issuers are making some concessions on new issues, which is helping,” said Jens Peter Sorensen, principal analyst at Danske Bank A/S. He speculates that Spain is offering a new premium. About 5 basis points.
Buoyed by strong demand, Spain slightly tightened its pricing above benchmark debt to 9 basis points from an earlier estimate of 11 basis points. The bookrunners for the transaction are Barclays, BBVA SA, Credit Agricole CIB, Deutsche Bank AG, JPMorgan Chase & Co., and Banco Santander SA.
Bond sales in European primary markets by governments, agencies and companies are expected to reach record levels this week on expectations that central banks will ease monetary policy this year. Money markets are betting that the European Central Bank will cut interest rates by more than five quarter points starting in April.
Théophile Legrand, interest rate strategist at Natixis, said Spain’s sell-off “confirms that investors are convinced that the start of the normalization cycle is near and want to secure some duration exposure.” .
–With assistance from Ronan Martin.
(Will be updated throughout.)
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