MADRID: Spain sold 3- and 5-year bonds at record low yields at auction on Thursday, as investors prepared for a likely significant easing of European Central Bank monetary policy later in the day.
The Treasury sold 4.5 billion euros ($6.1 billion), at the top end of the targeted amount. Both bonds sold for record low yields, with the 2017 bond at 0.968 percent, down from 1.039 percent when it last sold on May 8, while the 2019 bond sold for 1.520 percent, down from 1.648 percent on May 22.
Demand for both papers was around double the sums offered, reflecting similar bids as last month for the 2019 bill, but below the previous bid-to-cover ratio of 3.2 for the 2017 bond.
"Overall, that was a good auction result. Bid-to-cover ratios were not impressive as they were below this year's averages but pricing was strong with good overbidding and relatively small tails," rate strategist at BNP Paribas Ioannis Sokos said.
Appetite for Spanish debt has soared this year as a stronger-than-expected economic recovery gains pace and as traders search for returns amid record-low euro zone interest rates.
Among a series of expected policy measures, the ECB is on Thursday expected to impose negative interest rates on its overnight depositors on Thursday, as it seeks to cajole banks into lending and prevent the euro zone falling into Japan-like deflation.
Spain had sold 76.1 billion euros of medium- and long-term bonds this year following the auction, reaching around 57 percent of its gross end-of-year target.
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