$4.3 billion down. Just $62 billion to go.
Yesterday, June 17, Spain sold $4.3 billion in bonds at auction at surprisingly low yields of 4.86% for the 10-year notes and 5.90% for the 30-year bond. Both rates were slightly below the yield on existing Spanish bonds in the secondary market.
Just so we don’t get too giddy the comparable yields on 10-year and 30-year U.S. Treasuries are 3.22% and 4.15%, respectively. Yield spreads for Spanish bonds over the yield of German bunds, the European bond benchmark, climbed to 2.25 percentage points. That’s a record spread since the launch of the euro in 1999.
Still it’s great news that Spain was able to raise money in the financial markets at all. That it came at such relatively reasonable rate is a big plus.
But this is really the beginning of Spain’s challenge and not the end.
The country has to sell about $62 billion in bonds in 2010.
The biggest hurdle is the refinancing of $20 billion in bonds by the end of July.
Dear donzelion ,
Appreciate your advise. I’ve purchased 1000 unit today at 11.5 for long investment. Hope it will do well. 🙂
kelvinator,
Sounds realistic to me.
Would it be too cynical to suggest that the US Fed, Treasury and ECB are not beyond colluding to funnel pittances like a fair chunk of $20 billion in July to Spain’s auctions to keep their rates down and Europe from blowing up? Or is it just me that imagines these kinds possibilities after seeing suggestions of shenanigans in some recent US Treasury auctions in which – by following the serial numbers – you can see newly minted US bonds get traded back into the Fed within a week or two of issuance – raising the possibility that the US is running a shell game in which it is buying its own debt when real market demand starts to fail. Intermittently in recent months, Rick Santelli – the CNBC bond specialist – has reported that many bond traders suspect that’s what’s been going on.
If true, it just adds another variable to the equation making it still more difficult to guess how soon some bond vigilantes will cry out that Emperors Bernanke and Trichet have no clothes, that they actually look a lot like Mr. Ponzi once we realize their conservative banker act doesn’t mean much.
Foo – I’d work through your principles before looking at valuations. Jim’s dividend picks are an “income + growth” set (“growth,” except for the resource trusts, because dividends should be able to rise during inflation, and thus supplement bonds).
I suggest looking at whether those principles fit with your requirements – THEN looking at valuations.
For details about Santander itself, I suggest checking out the Emerging Banks report published by the Economist a few weeks back. It’s an excellent guide to the issues confronting all of these banks…
hi everyone, I’m new in Jubak picks. I thought that the rally just start and planning to start buying STD. Am I going to buy at the peak? Or should I wait few more days? What will be the good price to be in?
I closed my position on STD with around 20% gain which in the given climate is quite good for me. The stock rose anohher 8% after I sold. But I have the peace of mind and don’t need to worry much … Did anyone else sell?
I’m waiting on C shares to pop..
donzelion; Much of my sentiments exactly. Interesting to see the dividend yield move from roughly 10% to less than 6, without any news reports. Am in the green, slightly, but not quite ready to sell until I know something, of course it will be too late by then.
Jim – help me understand the attraction of Banco Santander given these facts. Seems to me that with the government arm wrestling its banks into buying bonds, Santander might just be using those Brazilian/Mexican deposits to lend money to Spain – until those Latin American countries start to object.
I’m beginning to think I’ve seen enough gains on this bank, and it’s time to move on to free up cash…unless the bank is in some sort of specially privileged position…