2nd UPDATE: Spain Plans 10-Year Euro Benchmark Bond Issue

5th Jul 2010 17:56

(Adds background) by Mark Brown Of DOW JONES NEWSWIRES LONDON (Dow Jones)--The Kingdom of Spain is planning to issue a fixed rate, euro-denominated, syndicated benchmark bond, maturing in October 2020, one of the banks hired to run the deal said Monday. Barclays PLC, Deutsche Bank AG, Banco Bilbao Vizcaya Argentaria SA, Banco Santander SA, Credit Agricole SA, and Caja de Madrid are acting as joint-lead managers. Pricing is expected in the near future, subject to market conditions. Moody's Investors Service rates Spain Aaa, but last week put the country on review for possible downgrade, citing deteriorating economic growth prospects, challenging fiscal targets, and concerns over rising funding costs. Any downgrade would most likely be by one, or at most, two notches, Moody's said. Spain lost its AAA rating at Fitch Ratings in May, when the agency cut the country to AA+, although Fitch has subsequently said it doesn't expect to downgrade Spain further as the country undertakes "aggressive" fiscal consolidation steps. Fitch's outlook on Spain is stable. Standard & Poor's Corp. cut Spain's rating by one notch, to AA, and assigned it a negative outlook. Worries about the ability of some euro-zone sovereign borrowers to raise funds in capital markets have caused volatility in sovereign bonds, with knock-on effects in other markets this year. Spain's bond and treasury bill redemption and coupon-payment obligations amount to EUR32 billion in July, but the country successfully sold EUR3.5 billion of five-year bonds at an auction Thursday--the maximum it planned to sell--easing market concerns over its ability to fund itself. -by Mark Brown, Dow Jones Newswires; + 44 (0)207 842 9485, [email protected] (Michael Wilson in London, Emese Bartha in Frankfurt, and Christopher Bjork and Bernd Radowitz in Madrid contributed to this item.) (END) Dow Jones Newswires July 05, 2010 12:56 ET (16:56 GMT)