(Clears repeating data about Austria)
* Austria will sell 50-year bonds, following Italy
* Spain will sell 15 year bonds
* Bond yields rise as investors digest the issuance
April 13 (Reuters) – Austria on Tuesday moved to lock in its current low borrowing costs with 50-year bonds, following a half-century issue from Italy, while Spain launched a 15-year newspaper.
Both deals are made through a syndicate of banks, with Austria to raise 1.75 billion euros and Spain six billion euros, according to a key manager’s memo seen by Reuters.
Last week’s Austrian and Italian bonds marked a resumption of a very long term, 50-year issuance.
After a strong start to the year with 50-year selling from France, Spain and Belgium, the bond selloff was driven by higher growth expectations and inflation weighed on bond buyers with losses and such issuance eased.
“European investors still rely on a lower narrative for the long term and therefore there is no fear on their part to buy longer term bonds as there is no fear of regime change in growth and inflation dynamics,” said Antoine Bouvet, senior pricing strategist. on ING.
“It is true that tariffs have moved higher, but in the grand scheme of things, they are still quite low.”
The European Central Bank has calmed the market by increasing its rate of asset purchases.
Ultra-long-dated bonds are considered to be one of the most risky government debt problems, because they are more sensitive to changes in the underlying interest rates. In addition, the ECB, which is pushing down euro area borrowing costs, has not bought bonds of more than 30 years.
Austria saw demand 13 billion euros and Spain 42 billion euros as both books shrank after the government cut offered yields.
That’s well below the 65 billion euros in offers Madrid received for a 50-year contract in February and 18 billion euros for Austria’s 100-year bonds last year.
Bouvet said the lower demand may descend to a large increase in yields this year meaning investors such as pension funds will no longer need to buy longer-term bonds. Some governments are also trying to get rid of bidders they believe will deliver an increased order
Euro area bond yields barely moved as data showed US inflation rose 2.6% year-on-year in March, slightly above forecasts.
But massive supplies weighed on the market, with German 10-year yields almost hitting a two-week high of -0.271% and Italian 10-year yields at their highest in more than a month at 0.78%.
Investors also digested the supply of bonds from the Netherlands, Italy, the UK and the sale of $ 24 billion worth of US 30-year bonds, all of which were sold at auction.
Reporting by Yoruk Bahceli; Edited by Catherine Evans, Alexandra Hudson and Giles Elgood