Portugal added 1-year bills to the scheduled 3 and -6-month bills on Wednesday due to “specific demand from investors”. Spain also just announced it will sell 3-year notes on Thursday.
Spanish 3s are yielding 3.3% compared to sub-3% last week.
Meanwhile, yields on the Portuguese bills due in Dec 2012 are at 4.8%. Interestingly, notes due just 10 months later, in Sept 2013 are yielding 12.7%. The market is pricing in some massive risks in that time period (possible) and/or the government believes the bonds are mispriced and hopes to fill the gap.
It’s hard to believe there are 800 bps or risk priced into those 10 months.
Both countries may be trying to top up the government coffers in case things take a turn for the worst.
