Peripheral banks, used to paying generous new-issue spreads compared to banks from the eurozone core, have become victims of their own success, and overwhelming demand for their bonds has withered in recent weeks as spreads have tightened. Until very recently, investors could not get enough of peripheral debt, but they have now started to pull back, worried by the limited upside. Combined demand for benchmark deals from banco espirito santo (BES) and bank of ireland reached only €3bn, just double the amount sold by the two and a far cry from the multi-billion books that peripheral banks were enjoying earlier this year.
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