Spain sells short-term debt, rates rise
Spain raised 4.66 billion euros in short-term debt on Monday but had to pay more than previously as Portugal's bailout talks sparked fresh fears over Madrid's ability to stabilise its own public finances.
The treasury said it raised 3.51 billion euros ($5.06 billion) in 12-month bonds at an average yield, or rate of return for investors, of 2.77 percent, up from the 2.128 percent paid at the last such auction on March 15.
It raised 1.15 billion euros in 18-month bills, paying 3.364 percent, up sharply from 2.436 percent last month.
Demand totalled 8.1 billion euros at the auction in which Spain aimed to sell between 4.5 and 5.5 billion euros in the 12- and 18-month bonds.
Portugal on April 6 became the third member of the euro zone after Greece and Ireland to request a bailout from the International Monetary Fund and the European Union.
The move has revived market fears that the debt contagion could hurt neighbouring Spain, Portugal's biggest trading partner, even though the Spanish economy seems to be turning around.
Spain has strengthened bank balance sheets, cut spending and pursued economic reforms to allay market fears that it will also need a bailout.
Spanish Prime Minister Jose Luis Rodriguez Zapatero has vowed to bring the country's public deficit to within a EU limit of 3.0 percent of gross domestic product in 2013.
The public deficit hit 11.1 percent of GDP in 2009, the third-highest in the eurozone after Greece and Ireland.
© 2011 AFP