MADRID: Spain may issue a 50-year bond, its longest ever, in coming months, an Economy Ministry source said on Tuesday, reflecting growing demand for the country's debt as its economic outlook brightens.
Some investors had shown interest in such a long maturity and the Treasury was looking into whether there was sufficient appetite by the end of this year or the beginning of next.
"We are open to see if we can garner interest and do some kind of private placement," the source said speaking on the day Spanish 10-year yields fell below their Italian equivalents for the first time in 18 months.
A new 30-year bond was also possible later this year, the source said.
Since they hit record highs in the summer of 2012, Spain's refinancing costs have tumbled through this year to their lowest levels since before the economic slump began in 2008.
That is in part due to last year's pledge by European Central Bank President Mario Draghi to protect the euro at all costs, which calmed fixed-income markets across the bloc.
It is also down to recent better-than-expected economic output in the euro zone, including Spain, where the government is confident the country will exit recession in the current quarter.
RANGE OF OPTIONS
Spain last issued a new 30-year benchmark, with a 4.7 percent coupon, in September 2009, according to IFR, a Reuters news and market analysis service.
The ministry source said it was reasonable to think the treasury might issue another this year.
"Probably, objectively speaking, it would be more welcome at the beginning of next year, but I don't want to lock in any decision," the source said.
Spain's average interest rate on circulating debt fell to 3.77 percent in August from 4.07 percent in 2011, while its average maturity stood at 6.24 years, down from 6.71 years in 2006.
The Treasury has taken advantage of renewed appetite to issue two 10-year bonds and a 15-year paper this year, as well as dollar-denominated debt, its first offering in the US currency since September 2009.
Madrid was also open to other debt instruments, a separate source close to the Treasury said.
"Right now there's demand which we haven't seen in a long time, not only for long-term debt but also alternatives such as inflation-index debt," the source said.
"There's nothing imminent right now, and with 80 percent of the (2013 bond issuance) target met, there's no hurry, but there are various possibilities on the table."
Spanish benchmark 10-year yields fell below Italy's for the first time since March 2012 on Tuesday as Italian bonds underperformed on concerns over the survival of Rome's fragile government coalition.
Italy successfully issued a 500 million euro ($663 million), 50-year private placement with a 4.75 percent coupon via Barclays in May.
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