Spain taps E4.5-5.5bln of.....>

SPAIN AUCTION PREVIEW: Spain taps E4.5-5.5bln of SPGB 0.45% Oct-22, SPGB 1.4%

Apr-28, SPGB 2.35% Jul-33 and SPGB 4.9% Jul-40 on Thursday. 

- BACKGROUND: With improving fundamentals, non-residents are apt to buy Bonos,

although the 24.5% and rising held by Bank of Spain, means that foreign buyers

struggle to find sellers. 

- RV/HISTORY: Spanish debt markets are trading at the tight end of their range

to Germany at 78bp. Observing the Spanish and Italian ASW curves, the SPGB 2033

appears to be quite cheap. The 5-10Y section of the Spanish curve has flattened

aggressively but there has been a mild steepening between Apr-28 and Jul-33 over

the past month, which might help the bid for the 2033. Also, the 2033 is the

only one of the four bonds trading cheap to the Spanish cubic spline curve. The

Oct-22 was last sold at a yield of 0.36% and cover 1.9x, the Apr-28 yielded

1.50% and cover 2.0x, the Jul-33 yielded 2.11% and 1.9x cover and Jul-40 at

2.46% and 1.4x cover.  

- RESULTS: Auction bidding closes at 0930GMT with results around 0940GMT