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Spanish Auction #Fail As 10Y Borrowing Cost Highest In 5 Months

Submitted by Tyler Durden on 04/19/2012 04:47 -0400

Heading into the auction saw spreads and yields rallying to around 403bps and 5.77% respectively for 10Y and the EUR rallying solidly over 1.3150 (helping to push the USD down and implicitly S&P futures up). The 2Y started to leak back wider heading into the auction at around 3.37% (perhaps on rotation to bid for the 10Y?) and as the 430ET deadline passed, yields and spreads shifted higher in the 10Y too by 2-3bps. Spain 5Y CDS was 490bps (-5bps) and 10Y a smidge wider at 470bps. The total sold met the hoped for EUR2.5bn with both seeing a rise in bid-to-cover (which we already noted is useless as a statistic given this was the second highest bid-to-cover ever for a 10Y bond). It was the all-important yield that told the tale of the fail which came at its highest in 5 months and almost 35bps cheap to the previous auction and the 3rd highest ever.

*SPAIN SELLS EU1.12 B 2014 BONDS
*SPAIN SELLS EU1.42B 10-YEAR BONDS
*SPAIN 2014 BONDS BID-TO-COVER 3.28
*SPAIN 10-YEAR BONDS BID-TO-COVER 2.42 VS 2.17 AT JAN. AUCTION
*SPAIN 2014 BONDS AVG YIELD 3.463%
*SPAIN 10-YEAR BONDS AVG YIELD 5.743% VS 5.403% IN JAN.

Spain 10Y bond auction yield - highest in 5 months and 3rd highest ever...

Spanish Equity index (IBEX) deteriorating rapidly (led by financials)...

UPDATE: 10Y yields are now +8bps from pre-auction and spreads +10bps and 2Y yields are popping even more according to Bloomberg as ES is -8pts off its pre-auction highs and EUR -40 pips from pre-auction. IBEX and broad European equities are off but credit (financials lagging) is deteriorating

Charts: Bloomberg

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Thu, 04/19/2012 - 04:49 | 2357497 Squishi

Geithner!!!

Thu, 04/19/2012 - 05:28 | 2357530 Future Tense

Looks like this auction was just another piece to the complete Eurozone failure. The following is another amazing video from Nigel Farage yelling at the ridiculous European politicians this week regarding the coming failure of the Eurozone.

http://www.ftense.com/2012/04/nigel-farage-providing-new-message-to.html

Thu, 04/19/2012 - 05:59 | 2357545 AldousHuxley

China says no bailout for Spanish ballers...

http://www.sportressofblogitude.com/wp-content/uploads/2010/06/spain-bas...

http://www.sportressofblogitude.com/wp-content/uploads/2010/06/spain-wom...

Thu, 04/19/2012 - 06:19 | 2357556 Ghordius

you listen to City-of-London-spokeman-and-darling Nigel Farage? In the video following your link he is misquoting the blasted IMF, just for example...

an eurozone breakup or eurobonds is still the either/or wet dream of the City's hyperhypothecating banksters

Thu, 04/19/2012 - 06:45 | 2357591 Death and Gravity

Of course, the mainstream biz press reports the Spanish auc as a sucess and surprisingly well executed etc etc.

Thu, 04/19/2012 - 04:55 | 2357503 ZippyBananaPants

Newman!!

Thu, 04/19/2012 - 05:01 | 2357506 Dead Canary

Bart!!

Thu, 04/19/2012 - 05:01 | 2357508 DavidC

And STILL the stock markets are holding up!

DavidC

Thu, 04/19/2012 - 05:09 | 2357514 GernB

The S&P initially dropped $7, but now it rallying back. If you just put the bad news in small print and the good news, no matter how trivial, in large print the average investor won't be able to see the bad news. It's a proven fact.

Thu, 04/19/2012 - 05:17 | 2357524 DavidC

Absolutely agree GernB.

DavidC

Thu, 04/19/2012 - 05:00 | 2357509 Croatian Patriot

It is OK until we cross the 9%. LTRO2655 is coming

Thu, 04/19/2012 - 05:17 | 2357522 sof_hannibal

Initiate GHOST protocal...

You meant -- LTRO666 COINTELPRO MKULTRA NDAA STARLITE Twist, Q* Expotential... is coming Central planning party biwlwlwchez

Thu, 04/19/2012 - 05:01 | 2357510 lewy14

The yield is in no-man's land.

Too high to really be sustainable, still too low to prompt another massive intervention by the IMF/EC/ECB/PTB/ETC.

Thu, 04/19/2012 - 05:10 | 2357517 GernB

Isn't that the worst case scenario for the markets. No central bank intervention, but Spain hasn't been "fixed" like Greece has :)

Thu, 04/19/2012 - 05:32 | 2357527 Dead Canary

IMF

ECB

FED

QE3

MIC

KEY

MOU

Thu, 04/19/2012 - 05:30 | 2357532 youngman

They had a EuroBond investor/banker on CNBC.....he trashed the sale...the cats out of the bag he said...but they sold as I thought they would ..and at a better rate than i thought...but they will be in the red by next week....another WTF sale of Spanish..and now French bonds....wierd...France where you know a socialist is going to get elected...and you as a Capitalist are buying their bonds.....lol...wierd I tell yA..JUST CRAZY....i NEED COFFEE NOW...

Thu, 04/19/2012 - 05:39 | 2357534 schatzi

tbh I'm a bit disappointed. I was hoping for something above 6% to get the juices flowing. Considering the state Spain is in, it can actually be viewed as a highly successful auction.

Thu, 04/19/2012 - 05:51 | 2357542 youngman

It would be very interesting to know exactly who bought them...

Thu, 04/19/2012 - 06:19 | 2357562 Ghordius

I agree, schatzi

Thu, 04/19/2012 - 05:41 | 2357535 DutchDude

IMF openly saying EU might fall apart... it's getting there... only thing is at what cost? How much tissuepaper will be thrown in the pit before it falls apart?

Troublesome times my friends...

Thu, 04/19/2012 - 05:44 | 2357538 Dick Darlington

OT: Italy Industrial Orders data out this morning: -13,2% YoY

Take a look at this chart. Industrial orders vs GDP

http://product.datastream.com/dscharting/gateway.aspx?guid=604f1880-ffb3-4468-8276-6defbab7318a&owner=ZRTN274&action=REFRESH

Thu, 04/19/2012 - 05:48 | 2357539 Pete15

Someone wake up Ben.

Thu, 04/19/2012 - 05:57 | 2357544 LongSoupLine

Have you seen the futures?...he's been awake, and busy.

Thu, 04/19/2012 - 06:08 | 2357551 Pete15

I havent but I guess I dont give that fuck enough credit. Ben is always on the dial ready to "save the world" with his bullshit.

Thu, 04/19/2012 - 06:19 | 2357559 LongSoupLine

Yep, you got it Pete. And that "dial" you speak of extracts straight from the asse(t)s of the middle-class. Well...it used to at least...now it's tapped directly to bone marrow.

Thu, 04/19/2012 - 07:02 | 2357609 Christoph830

Ben's night shift is just ending. He wouldn't have missed that auction for the world.....literally

Thu, 04/19/2012 - 06:01 | 2357548 Cassandra Syndrome

Nonsnense. Europe is fixed. I know because some shapeshifting Eurocrat on CNBC said so.

Thu, 04/19/2012 - 06:09 | 2357555 fonzannoon

wow futures up big. Unreal.

Thu, 04/19/2012 - 06:20 | 2357560 HD

Come on now - deep down we all knew they were going to prop this up yet again. The day the wheels finally come off will likely be some quiet Tuesday...

Thu, 04/19/2012 - 06:19 | 2357561 bullmkt

i think he smelled" eurapocalypse now" and that was on Monday.

Markets and EUR up since then,Thank you ZH,bearish bias priceless as markets bid up continually.

Thu, 04/19/2012 - 06:27 | 2357571 fonzannoon

I have been waiting for this headline below from bloomberg. I would bet bigtime you will see a lot more like these as the US heads twoards it's next downgrade.

Denmark’s biggest banks are firing Moody’s Investors Service as they win assurances from some of the country’s biggest investors that the opinions of ratings companies hold limited value.

Thu, 04/19/2012 - 06:29 | 2357577 lolmao500

I'm waiting for this to happen to the UK, US and Japan...

Thu, 04/19/2012 - 07:23 | 2357634 virgilcaine

We will have a red open.

Thu, 04/19/2012 - 07:35 | 2357641 casamader

Isn't that the worst case scenario for the markets. No central bank intervention, but Spain hasn't been "fixed" like Greece has

casas de madera

Thu, 04/19/2012 - 08:09 | 2357689 smb12321

In this crazy environment, bad news that is not quite disastrous is treated as a positive. I still have not heard what possible course of action those who say Spain will be "OK" should take. But you have to go with - not fight - the market.

Spanish Auction #Fail As 10Y Borrowing Cost Highest In 5 Months

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