Spain raises 3.95 bln euros in bonds at lower rates

15th September 2011, Comments 0 comments

Spain succeeded in raising nearly four billion euros at lower rates in a key bond auction Thursday, seen as a significant feat in the midst of the eurozone debt storm.

The sale showed Spain was able to get market financing at manageable, albeit expensive, terms -- far better than those the market offered Italy just two days earlier.

The European Central Bank has boosted the market by buying Italian and Spanish government bonds since a summer panic broke out over the debts of the eurozone's third- and fourth-biggest economies.

Spain raised 3.95 billion euros ($5.4 billion) in the auction of eight- and nine-year bonds, the Bank of Spain said in a statement.

Demand outstripped supply by about two-to-one, it said.

The demand for the issue was a positive sign, especially when compared to the weak reception for an Italian bond issue on Tuesday, said Soledad Pellon, analyst at brokerage IG Markets.

"The yields Spain is paying are far from ideal, even more so when we take into account that the ECB has been making massive purchases of Spanish bonds on the secondary markets," Pellon said.

"This should have eased the pressure on our country much more," the analyst added.

"Nevertheless, the auction went relatively well if we take into account the highly uncertain context now."

© 2011 AFP

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