Spain borrows at stable rates despite downgrades

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Spain secured stable repayment rates for its sovereign debt on Tuesday, despite a worsening economic outlook and successive downgrades by credit raters, the central bank said.

The Bank of Spain said in a statement it auctioned 4.602 billion euros (6.287 billion dollars) in 12 and 18-month bonds with respective rates of 3.608 and 3.801 percent -- little changed from the last sale on September 20.

The central bank said in a separate statement that Spanish private banks saw their levels of bad debt rise in August to 127.73 billion euros as borrowers became less likely to pay back their mortgages and other loans.

The figure, a key indicator of economic health, represented 7.14 percent of the banks' total holdings, up from 6.94 percent in July.

Spain's government has been forced to overhaul the banking sector which was hit hard by the bursting of a housing bubble in 2008 and the global financial crisis.

Credit ratings agency Standard & Poor's last week downgraded Spain's sovereign rating from AA to AA-minus, with a negative outlook, citing high private debt and unemployment and weak growth.

Fitch Rating slashed Spain's sovereign credit rating by two notches this month.

© 2011 AFP

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