Spain Draws Strong Demand for T-Bills

Spain's Treasury bill sale drew strong demand Tuesday, reflecting investors' preference for very short-dated euro-zone peripheral sovereign debt, despite contagion fears, while an upcoming Italian debt sale was raising caution towards non triple-A-rated sovereign debt.

Disputes over how to handle Greece's mounting debt, the implications of Spanish regional elections Sunday—at which the ruling Socialist Party suffered heavy losses—Italy's ratings warning and the country's scheduled debt sales in jittery market conditions have kept investors on edge, analysts said.

"We remain overall cautious, as the outlook in the periphery remains extremely uncertain. Over the next few weeks there are many risky events scheduled in the periphery countries and Spain and Italy have not been recently immune to the pressure," said Chiara Cremonesi, a rates strategist at UniCredit Bank in London.

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- Posted: 2011-05-24 10:11:17

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