Spanish 30-year yields hold above 2 pct after higher demand at auction

 

Yields on 10-year Greek bonds fell to their lowest this month, down 34 basis points at 11.25 percent , after Greece said it would repay a 450 million-euro loan to the International Monetary Fund due on the day. 

   

Spain sold 1.28 billion euros of its 30-year bond at an average yield of 2.068 percent, with demand outstripping offers by 1.4 times, compared with 1.2 times at the last auction. Madrid also sold 2017 and 2025 bonds.

   

The bonds that the ECB and national central banks bought in Spain, Ireland and Portugal during the first month of the ECB's trillion-euro bond-buying programme exceeded the average maturity of the debt eligible for the scheme. 

   

It may be that the ECB slows down its purchases of long-term Spanish bonds in the coming months to stay as close as possible to the average, but private investors are likely to try to rebuild their portfolios after selling to the central bank.

   

"Everybody's searching for yield," said Martin van Vliet, senior fixed income strategist at ING in Amsterdam. "The long end has benefitted from the behaviour of peripheral central banks, and the tightening trend could resume if the Greece fears ease."

   

Spanish 30-year bond yields were 4 basis points higher at 2.075 percent, having risen from record lows around 1.75 percent in the past month.   

   

Analysts expect the ECB programme will lead governments to sell as much long-term debt as possible. In the aftermath of the 2011-2012 debt crisis, countries such as Spain or Italy mainly issued debt expiring in less than a decade, while Portugal, Ireland and Greece had no access to markets at all.

   

Italy plans to sell 15-year bonds along with some shorter-dated bonds on April 13. 

   

The ECB's Spanish bond purchases in the past month had the highest average maturity in the euro zone at 11.66 years, compared with an average maturity of eligible debt of 9.23 years, according to Rabobank estimates. 

   

In Greece, a government official told Reuters on Thursday that "the payment has been scheduled and it will go out later today".

Greece also made another plea to the euro zone for cash to avert bankruptcy. But it was told to present an improved list of economic reforms within six working days for finance ministers to pave the way for more lending, EU officials said. 

   

"The imminent risk of Greece defaulting on the IMF seems to have been diffused," said Gianluca Ziglio, executive director of fixed income research at Sunrise Brokers in London. 

   

Ziglio added that Russia's pledge of closer cooperation with Greece following bilateral talks at the Kremlin was seen by bondholders as a potential safety net in terms of debt repayments, although both leaders said Athens had not asked for financial aid. 

   

German 10-year Bund yields inched lower again on Thursday, hitting a new record low of 0.151 percent.