Spain bonds see solid demand as Greek talks drag on

Eur strong today after the Spanish auction went smoothly. The problem here seems to be, what currency to own. Euro with the debt situation, or USD with it’s many problems? Reuters reports;

Spain saw strong demand for 3.95 billion euros ($5.67 billion) of medium-term bonds on Thursday, though a broad drop in risk appetite and lingering uncertainty over how talks on fresh aid for Greece will pan out kept yields high.

In a litmus test of investor appetite for peripheral euro zone debt as policymakers thrash out a plan to avert a Greek default, the 2014 bond, with a 3.4 percent coupon, sold 2.75 billion euros at an average yield of 4.037 percent.

That compared with 3.568 percent at the previous auction in April, while the bid to cover rate rose to 2.5 compared with 1.8.

The 2015 bond, last issued in September of last year and with a coupon of 3 percent, sold 1.2 billion euros at an average yield of 4.230 percent, slightly lower than yields on the secondary market.

The bond was 2.9 times subscribed after being 1.6 times subscribed at its last auction.

“Since the (2014) launch early April, we’ve had an escalation on the peripheral side, so a firm selling since then, which is why (the yield) jumped so much,” economist at 4Cast Jo Tomkins said.

“You’ll see plenty of buyers coming in at that level, especially since the Greek deal seems to be moving in a positive direction.”