LONDON: Spanish 10-year yields held steady on Tuesday as the launch of the country's first new bond of that maturity in over a year drew early strong interest.
German Bund futures fell 20 ticks to 142.70 after German ZEW sentiment data came in far above expectations.
Spain has got off to a flying start to its funding this year as abundant liquidity and the prospect of European Central Bank support underpinned appetite for its debt.
The 10-year sale, via syndication, represents a strong show of confidence for the country, which only last year came near to needing a sovereign bailout.
"Sentiment is positive for peripheral markets as we saw last week with Italy's 15-year syndicated sale. We can expect it will go fine," Alessandro Giansanti, senior rates strategist at ING said.
Ten-year Spanish yields were about one basis point lower at 5.16 percent. Five- and two-year yields were slightly higher at 3.72 percent and 2.32 percent respectively.
Spain's Treasury hopes to raise at least 3 billion euros ($4 billion) through the placement of the 10-year bond, and could shift upwards of 4 billion if the transaction went well, a government source said on Tuesday.
It set the final price on the bond at midswaps plus 365 basis points, booking interest in excess of 17 billion euros, a source told IFR, a Thomson Reuters news and market analysis service.
Madrid's sale follows Rome's successful 6 billion euro sale last week of its first 15-year bond in more than two years.
The decision to do the sale via syndicate was expected to secure demand, while Spain should still benefit from an environment where the pledge of central bank support had allowed investors the luxury to seek returns.
"I think people will look at the carry that's there... and in the current mood there will be more than enough people out there who will be willing to chase (yields), plus the domestics," Marc Ostwald, strategist at Monument Securities said.
Among core euro zone debt, German Bund futures fell after the Mannheim-based ZEW think tank said its monthly poll of economic sentiment rose to 31.5 points from 6.9 in December, beating a median forecast for 12.0 points in a Reuters poll of 37 economists.
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