Spain on Thursday sells a.....>

SPAIN AUCTION PREVIEW: Spain on Thursday sells a new linker SPGBEi 0.15% Nov-23

for E1.75-2.25bln, and taps the 0.05% Jan-21 Bono, 0.35% Jul-23 Bono, and 1.40%

Apr-28 Obli for a combined E2.0-3.0bln.

- BACKGROUND: This will be the fifth sale in 2018 of 3-Yr benchmark Jan-21,

which was last tapped on May 3 at -0.15% yield and 2.66x, and the eighth of the

year for the 10-Yr Apr-28, which at its last tap on May 17 sold at 1.37% yield

and 2.25x cover. This is the first tap of the 5-Yr Jul-23, which was launched

May 17 at 0.44% yield and 1.83x cover, while the Nov-23 linker is a new issue.

- RV: In the past month the Spanish curve has bear steepened with 10Ys

underperforming, Apr-28 out 19.5bps to 1.486%, and 3Ys and 5Ys up 16.4bps and

12.9bps, respectively. 10s look relatively attractive to Bunds vs a month ago

(wider by 30bps) but at 103.5bps is well off the 148bps May high and 93bps

richer to BTPs. The new Nov-23 linker has a real yield of around -0.72% in the

grey market (Bloomberg data). This seems a reasonable valuation, 50bps above the

Nov-21 and 20bps below the Nov-24, and an implied inflation breakeven of 1.30%.

- RESULTS: Auction bidding closes at 0830GMT with results around 0840GMT.