Spain’s first nine-month bill auction gets good reception

Spain’s first auction of nine-month bills on Tuesday attracted healthy demand as the Treasury comfortably met its issue target.

The debt-management arm of the Economy Ministry sold 3.115 billion of nine-month paper, which is replacing 18-month bills in response to investor demand. At 7.203 billion euros, bids for the issue were over double the amount sold. The cutoff yield for the issue was 1.165 percent.

The Treasury sold a further 886 million euros in three-month bills meeting its target for the two legs of the auction of four billion euros. The marginal yield fell to 0.445 percent from 0.460 percent on January 22. The bid-to-cover ratio for the three-month bills was 5.76 times, up from 4.18 last month.

“The auctions were very good, with rates in line with those expected and high bid-to-cover ratios,” Reuters quoted Cortal Consors analyst Estefanía Ponte as saying. “There was good demand for the nine-month issue as was expected.”

At mid-afternoon, the spread between the yield on the Spanish benchmark 10-year government bond and the German equivalent was down two basis points at 360 basis points.

The Treasury returns to the market on Thursday with an auction of two-, six- and 10-year bonds.