Italy and Spain are both set to launch syndicated bond sales today, taking advantage of temporarily benign market conditions and maybe with a weather eye on the U.S. debt stalemate which could soon throw the world’s markets into turmoil with an Oct. 17 deadline fast approaching.
After Silvio Berlusconi’s failure to pull down the government, Italy’s political crisis is in abeyance for now and its bond yields have eased back. Spain has issued nearly all the debt it needs to this year already.
It’s not quite “crisis what crisis” but the news flow has been largely positive:
- Portugal (after its own self-inflicted political crisis over the summer) has seen its borrowing costs fall to their lowest in more than a month after its EU/IMF lenders said it was meeting its bailout goals.
- Greece is predicting an end to six years of recession in 2014 and, just as importantly, a primary surplus.
- And the IMF yesterday predicted Italy, Spain, Portugal, Greece and Ireland (which will soon become the first euro zone member to exit its bailout programme) would all grow next year.
So it shouldn’t be a surprise that Italy will offer a seven-year bond while the Spanish Treasury mandated banks for a 31-year bond, the first of such a long maturity since 2009. Some of Spain’s biggest companies – Santander, Gas Natural and Telefonica – have also forayed into the debt market.
In a sign of how far Madrid has come since a bailout was seen as all but inevitable a year ago, the government has also toyed with the idea of issuing a 50-year bond at some point.