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Home News Spain bond rates ease as markets relax

Spain bond rates ease as markets relax

Published on 05/12/2012

Spain's 10-year borrowing rates eased Wednesday as it raised 4.25 billion euros ($5.6 billion) in a sale of sovereign bonds, a sign of strengthening confidence in the troubled country's finances.

The Treasury met its target of raising between 3.5 and 4.5 billion euros in bonds of three, seven and 10 years’ maturity, the Bank of Spain said in a statement.

The rate of return demanded by investors on the benchmark 10-year bond was 5.29 percent, down from 5.46 in the last comparable sale on October 18. On the three-year bond it eased to 3.39 percent from 3.62 percent on November 22.

The rates fell amid an easing of tension on markets after the eurozone made a deal giving Greece more time to clear its debts.

Economists had warned that the debt crisis that led Greece to be bailed out could spread to Spain, the fourth-biggest economy in the eurozone.

The rate on the seven-year bond was higher than in the last comparable sale, which took place in January before the worst of this year’s market fever about Spain. It rose to 4.67 percent from 4.54 on January 19.

Speculation surged over recent months that Spain would need to be rescued by its eurozone partners and the European Central Bank, but Madrid has held off so far and completed its borrowing schedule for 2012 without outside help.

Its economy continues to pose a worry, however, deep in recession with one in four workers unemployed and tough deficit-cutting measures further dampening consumption.

Spain’s risk premium — another benchmark of financial health which measures the difference in yields demanded by traders in its 10-year bonds and those of Germany — also eased Wednesday, but was still high at 394.5 basis points.