Spain sells 3.5 bn euros in long-term bonds, rates drop
Spain sold 3.46 billion euros of 10- and 30-year bonds on Thursday at lower interest rates, reflecting easing market fears over the country's ability to manage its public debt.
The treasury auctioned 2.46 billion euros ($3.34 billion) of 10-year bonds at an average yield, or rate of return for investors, of 5.20 percent, compared with 5.446 percent at a sale on December 16.
It sold 997 million euros of 30-year bonds at an average yield of 5.957 percent. Bonds of similar length were trading at the market at 5.99 percent.
Demand totalled 5.3 billion euros at the auction in which Spain aimed to raise between 3.0 and 4.0 billion euros.
Concerns that Spain could be forced to seek a rescue by the European Union and International Monetary Fund as Ireland and Greece did last year pushed the country's bond rates sharply higher in recent months, adding to the costs of servicing Madrid's sovereign debt.
Those fears appeared to have eased since then as Madrid has strengthened bank balance sheets, cut spending and pursued economic reforms.
Prime Minister Jose Luis Rodriguez Zapatero has said his government narrowly beat its 2010 public deficit target of 9.3 percent of gross domestic product.
He has vowed to bring the public deficit down to 6.0 percent this year and to within a EU limit of 3.0 percent in 2013.
Spain's public deficit hit 11.1 percent of GDP in 2009, the third-highest in the eurozone after Greece and Ireland.
© 2011 AFP