Spain will tap the market.....>

SPAIN AUCTION PREVIEW: Spain will tap the market for E3.0-4.0bln today. On offer

are the 1.95% Apr-26 Obli, 0.60% Oct-29 Obli and the 2.70% Oct-48 Obli.

- BACKGROUND: Spain has met 49.2% of planned YTD issuance, below the broader

eurozne average of 57.3% and running slightly behind of last year (~63% issued

by this point).

- RV/HISTORY: In line with core EGBs, Spanish bonds have rallied sharply since

the beginning of May on the back of mounting risks to the economic outlook and

inflation trajectory. The nomination of Christine Legarde as the successor to

Mario Draghi at the ECB has further lifted Spanish bonds on the expectation that

the former IMF chief will chart a relatively dovish course. Reflecting the

compression in political risk premia, the 10-year Obli-Bund spread has narrowed

to 60bp from a YTD high of 129bp in January, while the 10-year CDS has traded

down to 68bp from 122bp over the same period. Spreads relative to the comparable

EUR swap: 1.95% Apr-26 Obli (+5.8bp), 0.60% Oct-29 Obli (+13.5bp), 2.70% Oct-48

Obli (+67.0bp).

- TIMING: Results are due out after 0945BST