Switzerland on Wednesday sold 622 million Swiss francs ($526.2 million) as it re-opened a 10-year bond, its first bond auction since April, and attracted more bids than when it last offered it.
The Swiss government had sold a mere 150 million francs when it re-opened in April a 3.5 percent bond maturing in 2033 and only 433 million francs the last time it offered a tranche of the 3.0 percent, 2018 bond in November 2007. The issue had a bid-to-cover ratio of 1.44 on Wednesday. "This is not a bad result," said Marc Ostwald, a bond analyst at Monument Securities in London. "There is an improved bid-cover ratio since last year when it garnered a really poorly 1.2 times." "This is above expectations," said a bond trader who preferred not to be named.
The Swiss government needs to finance a 6.0 billion franc cash injection into national bank champion UBS, which is struggling with subprime losses. But Finance Minister Hans-Rudolf Merz told Reuters today's bond had nothing to do with UBS' package. "That is being finance separately," Merz said.
Today's bond is part of the confederation's 2009 refinancing programme. "We have now come to the market so that we can already raise money for 2009," Grego Valko, head of the Finance Ministry's treasury desk told Reuters. "We begin now with the 2009 bond issue program. There are about 10 billion Swiss francs worth of issues that we need to refinance."