Spain sells $3.2 bn in bonds
By IANSFriday, December 17, 2010
Madrid, Dec 17 (IANS/EFE) Spain raised 2.4 billion euros ($3.2 billion) in a Thursday auction of 10- and 15-year bonds, although the interest rate it was forced to pay on that debt was the highest since 1997.
The Spanish treasury issued 1.78 billion euros in 10-year bonds at an average interest rate of 5.48 percent, up from 4.63 percent in a Nov 18 auction.
It also issued 618.67 million euros in 15-year bonds at an average interest rate of 5.96 percent, compared with 4.55 percent in the previous sale.
Demand from investors came in at 4.57 billion euros ($6 billion), or almost double the value of the Spanish bonds on offer.
Ratings agency Moody’s warned in a report Wednesday that it may downgrade Spain’s credit rating, although it also said fears of a Greece- or Ireland-style bailout were overblown.
Thursday’s auction sent the risk premium between Spanish 10-year bonds and the benchmark German 10-year bond higher, with the spread rising from 246 basis points at the start of the secondary market trading session to 250 basis points just minutes after the sale.
The strong demand for Spanish debt is a sign of investor confidence, experts consulted by EFE said, noting the scant interest in recent bond issues by debt-ridden Portugal and Greece.
They also allayed concerns about the inevitability of a debt default if interest rates on Spanish 10-year bonds were to rise above a certain threshold, such as 6 percent.
–IANS/EFE
