Nope. Not good.
Just a day after Ireland’s up-to-€90bn bailout, Spain went to the market to sell €4 to €5bn worth of three- and six-month debt. The results of that auction are out.
From a broker:
SPAIN DEBT AGENCY (TESORO) SELLS €3.26B VS. €4-5B INDICATED IN 3-MONTH AND 6-MONTH – Sells €2.09B in 3-month Bills; Avg Yield 1.743% v 0.951% prior; Bid-to-Cover: 2.3x v 2.77x prior – Sells €1.16B in 6-month Bills; Avg Yield 2.111% v 1.285% prior; Bid-to-Cover: 2.6x v 2.08x prior
The amount sold and the bid-to-cover ratio are the things to look at here (higher yields are, well, just expected at this point). However, Spain failed to sell all of the debt it had hoped to (that minimum €4bn) and yet bids remained relatively robust — which might suggest some offers were simply unacceptable (read: too low) for the Spanish Tesoro.
It’s also eerily (scarily) reminiscent of a September auction of six-month Irish bonds — and could be even ‘worse’ given that the Spanish auction involved three-months.
Still though, today is very much a ‘risk-off’ day. Perhaps it was just bad luck.
Or perhaps not.
Update: There seems to be some confusion (see comments below) about whether Spain was aiming to sell €3-€4bn worth of bonds on Tuesday, or the €4-€5bn written above. We haven’t gotten to the bottom of it yet — though every (English) calendar mention we saw this morning said €4-€5bn. This Spanish release says €3-€4bn.
Related links:
Contagion fears over ‘too big to bail’ Spain – FT
Spain shakes, rattles and rolls – FT Alphaville
Swelling Spanish bond yields – FT Alphaville
A loser’s nightmare in Europe’s debt auctions? – FT Alphaville