(Bloomberg) — Austria decided not to proceed with a syndicated sale of long-maturity bonds on Wednesday, the latest sign of fading investor appetite for duration.
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The nation’s debt agency said it will only go ahead with a five-year debt offering, according to people familiar with the matter who asked not to be identified. Earlier this week, it approached investors to gauge interest for a tap of its existing bonds due 2086, which pay a 1.5% coupon.
It’s the latest evidence of weaker demand for longer-dated bonds in Europe, where sales are picking up again after a mid-year lull. A three-tranche transaction for drinks maker Diaego Plc saw the smallest bid for the 20-year notes, while Dutch lender ING drew far less demand for a longer tranche versus the shorter one.
Strategists at Rabobank estimate Austria will raise up to €4.5 billion ($5 billion) with the five-year note issuance, which is expected to price on Wednesday. Demand so far has been tepid, with orders less than half the €31.9 billion seen for a new 15-year security in May.
The Austrian Treasury declined to immediately comment on the deal.
While the decision shows the market for ultra-long bonds hasn’t fully recovered since a bout of high inflation, some demand has been lurking this year. The country privately sold two tranches of its century bond maturing 2120 in February and June, for a total of €300 million.
Austria’s long-term foreign currency debt rating was affirmed at AA+ by S&P Global Ratings last week, with the firm also raising the outlook to positive from stable saying the economy remains robust.
–With assistance from Marton Eder.
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