(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.
The nation’s debt agency moved ahead only with a five-year debt sale, 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.
“At the moment and at the prevailing yield levels, demand was not sufficiently strong,” the Austrian Treasury said in an emailed statement.
Long-dated debt has lagged so far this year after leading gains in 2023. A Bloomberg index of pan-European sovereign and corporate bonds maturing in over 10 years is down 0.1%, while a similar gauge for debt due within one to three years has returned 2.4%.
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 three tranches of its century bond maturing 2120 in February, April and June, for a total of €550 million ($611 million).
The nation is seeking to raise €4.5 billion with the five-year note issuance on Wednesday paying a smaller spread than initially expected, as sovereign bonds gained across the globe. Still, the €16.5 billion demand for the notes was about half the orders seen for a similar-size sale of 15-year bonds in May.
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.
(Updates with final terms of the sale, comment from Austrian Treasury and additional context starting in paragraph two. An earlier version of this story corrected the number and size of private bond placements in the sixth paragraph.)
©2024 Bloomberg L.P.
