Today, Spain sells............>

SPAIN AUCTION PREVIEW: Today, Spain sells E3.5-4.5bln of the new SPGB 0.45%

Oct-22, SPGB 6% Jan-29 alongside E0.25-0.75bln of the SPGBei 1.8% Nov-24.

- BACKGROUND: Foreign demand (in particular) will likely shrink as a result of

the Catalan referendum. There was a small E3.9bln Spanish bond redemption paid

on Monday but will not likely help much.

- RV/HISTORY: The new Oct-22 is trading at a 15.4bp spread to the existing 5Y

bmk, the 0.4% Apr-22 in the grey market this morning. This makes the new

security 5.7bp cheaper on an asset swap basis, which is not particularly

generous given the slope of the Spanish credit curve at this tenor. With

problems in Catalonia, Spanish paper looks optically cheap to all other EGBs and

the spread. The 6% Jan-29 is an old off-the-run bond that is likely addressing a

liquidity issue but also looks fairly cheap to swaps. Finally, note that the

range on the linker is wider than usual, extending from a very low E0.25bln to

E0.75bln. Even after some rise of Spanish real yields because of Catalonia, the

2024 offers -0.05% and is not far from all-time lows for this issue.

- RESULTS: Auction cut-off is 0930GMT, results due around 0940GMT