Spain has to pay more to raise fresh cash

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Spain raised 3.8 billion euros ($5.2 billion), just below its target of 4.0 billion euros on Thursday but had to pay higher rates of returns to investors to secure the fresh funds.

Concerns that eurozone debt troubles could spread to Spain pushed bond rates sharply higher last year, adding to the costs of servicing the country's sovereign debt, and although they have steadied since, concerns remain.

The government has strengthened bank balance sheets, cut spending and pursued economic reforms to allay market fears that Spain may be forced to seek a rescue by the European Union and IMF like Greece and Ireland last year.

The Treasury said it sold 2.65 billion euros in five-year bonds on Thursday at an average yield of 4.389 percent, up from 4.045 percent in the last comparable auction February 3, 2011.

It also sold 1.15 billion euros in three-year bonds at an average yield -- the rate of return earned by buyers of the bonds -- of 3.592 percent, up from 3.254 percent in the last such auction in February.

Demand for the five-year paper was 2.2 times the amount sold and three times for the shorter-dated bills.

The Treasury had hoped to raise between 3.0 and 4.0 billion euros.

© 2011 AFP

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