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Madrid region sells bonds, taps demand for Spanish debt
January 23, 2013 / 2:24 PM / 5 years ago

Madrid region sells bonds, taps demand for Spanish debt

MADRID (Reuters) - The Madrid local government said it sold all 2.27 billion euros of debt it is authorised to issue this year via two placements, including the first bond auction by a Spanish region since March.

A man walks past the empty terrace of a restaurant in central Madrid January 8, 2013. REUTERS/Susana Vera

Tapping into a strong revival in investor interest in Spanish public debt, the region sold 1 billion euros in five-year bonds on Wednesday, Thomson Reuters news and analysis service IFR reported.

Spain’s 17 regions have been virtually shut out of debt markets in the last year due to widespread concerns over their finances, forcing them to apply for central government aid to pay their bills.

The Community of Madrid, which comprises the country’s capital city and outlying districts, also privately placed a 1 billion euro tap of its September 2026 bond through Goldman Sachs, a source told IFR.

It was not clear how the remaining 270 million euros had been raised.

At the sharp end of the euro zone debt crisis, Spain has seen its sovereign risk premiums pull back from the euro-era highs they hit last summer on a European Central Bank promise to buy struggling countries’ debt in the secondary market.

That pledge has encouraged investors in search of higher returns to move back into debt issued by the weaker euro zone nations, and Spain saw unprecedented level of interest for a 10-year syndicated bond on Tuesday.

The Madrid region, responsible for nearly a fifth of the country’s economic output, was forced to postpone a planned bond issue in October, blaming unfavourable market conditions. It later made a private placement of 1.45 billion euros with a single international investor.

The last bond to be issued by a Spanish regional authority, also by Madrid, was a 665 million euro, 2015 bond sold in March.

Madrid sold Wednesday’s five-year paper at 190 basis points over a similar Spanish government bond due in Jan 2018. The coupon was 5.75 pct, and order books reached at around 1.9 billion euros from lead banks Barclays, BBVA, CA CIB, Santander and SG CIB, IFR said.

Reporting By IFR and Robert Hetz; Writing by Paul Day; Editing by John Stonestreet

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