Spain raises €3B ($3.85B) in oversubscribed bond auction, pays higher interest rate

Spain raises $3.85B in bond auction

MADRID — Spain raised nearly €3 billion ($3.85 billion) in 15-year bonds Thursday, easing market tension over its ability to find financing amid a heavy debt load and frail economy.

Demand for the bonds more than doubled the amount on offer and helped allay fears that Spain could need a bailout like Greece earlier this year.

“This result confirms that appetite for Spanish paper is alive,” analysts at UniCredit Research said, adding that it was “a remarkable result.”

The average interest rate was 5.116 percent, up from 4.43 percent for the same bonds in April.

Last week, Spain sold €6 billion in syndicated 10-year bonds.

Spain must meet €16 billion in redemptions on July 30, even as it struggles to emerge from nearly two years of recession.

Spain has enacted an austerity program to help cut its debt load but the measures also risk choking the economic recovery.

The successful auction provided some upbeat news after recent bleak financial reports.

The Bank of Spain said Wednesday that borrowing by Spanish banks from the European Central Bank last month broke records, indicating their difficulty in raising money on the international market.

Spanish banks sought €126.3 billion in funding from the ECB in June — an unprecedented 48 percent jump from May. That worried some investors that EU stress tests of banks, which are due to be published July 23rd, could reveal weak spots in the country’s financial sector and require bailouts or recapitalizations.