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Trend Indicators Remain Bearish

--Spain Sees 2019 Net Issuance Broadly In Line With '18: Debt Head
--Spain Sees No Need To Issue Foreign Currency Bonds
--Spain Exploring Possibility Of Move To Two-Way CSA
By Luke Heighton and Nick Shamim
     BRUSSELS (MNI) - Spain has no plans to issue a new ultra-long bond with a
maturity over 50 years in 2019 as it sees no real money demand in such tenors,
but retains the capacity to tap the current 2066 maturity bond, Spain's senior
debt manager told MNI Tuesday.
     Speaking on the sidelines of AFME's European Government Bond Conference,
Pablo de Ramon-Laca Clausen, Head of Funding and Debt Management at the Spanish
Treasury, said most companies do not have liabilities -- and therefore do not
need to purchase assets -- at those maturities.
     Spain tapped the current on-the-run 2066 SPGB issue last week, taking
outstanding issuance to almost E10 billion. Spain normally tries to build
benchmark issues up to E20 billion in order to ensure there is enough liquidity,
"so we still have the capacity to continue tapping the 2066 SPGB," de Ramon-Laca
Clausen added. 
     "As a result, there is no reason to expect the issuance of a new
ultra-dated bond sale in 2019," said de Ramon-Laca Clausen.
     When looking at syndicated maturities that Spain is looking to sell in
2019, de Ramon-Laca Clausen said for the last several years, the Treasury has
conducted four syndicated deals per year: two in 10-year nominals, one
longer-dated nominal and one linker bond issue. 
     "There is no guarantee that this will also be the case for 2019, however,
we aspire to be a predictable presence in the market," explained de Ramon-Laca
     Although always open to possibilities offered by issuing debt if foreign
currency, Spain's debt head said there was no need to chase it.
     "We are always looking at the possibility to issue in foreign currency, but
with the interest rates in historic lows, we did not have the need to do it
these levels for last few years," de Ramon-Laca Clausen said. 
     "In any case, as we do not have assets denominated in foreign currency, we
would have to hedge any issuance in foreign currency." 
     Currently, Spain has a one-way credit support annex (CSA), "which makes the
hedging of these positions onerous and limits the possibility to find an
opportunity that is interesting both for the Treasury and for the investor", so
we are exploring the possibility to move to a two-way CSA, concluded de
Ramon-Laca Clausen.
     --NET 2019 ISSUANCE 
     Spain anticipates 2019 medium and long-term redemptions will total E91.766
billion, with net issuance broadly in line with this year. The exact amount to
be issued in 2019 "is yet to be determined," explained de Ramon-Laca Clausen.
     For 2018, the funding programme anticipated net issuance to fall by E5
billion to E40 billion from last year, with planned issuance E218.687 billion,
split between E134.310 billion in medium and long-term instruments and E84.377
billion in Letras. 
     So far, Spain has completed E196.3 billion or 89.8% of the 2018 funding
programme. This equates to E124.51 billion (92.7%) in medium and long-term
instruments, and E71.8 billion (85.1%) in Letras, so we have still E22.387
billion to issue, confirmed de Ramon-Laca Clausen.
     Spain has experienced a very positive year in the debt markets in 2018,
with the average cost of the outstanding debt hitting a historic low of 2.40%,
de Ramon-Laca Clausen said.
     "This all-time low in the average cost of outstanding debt has been
possible even within a strategy of increased duration," he added.
     The average life of outstanding Spanish debt has increased to 7.56 years as
of today versus 7.13 last year and from 6.20 years in 2013.  The average life at
issuance of medium and long-term instruments has reached an all-time high of
11.9 years, so far this year.
--MNI London Bureau; tel: +44 203-586-2229; email:
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