Spain raises 2.345 bln euros but at higher rate: source

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Spain raised 2.345 billion euros on the bond market on Thursday in the country's first debt sale since its credit rating was cut last week but the rate was higher than the last time it sold government debt, a market source told AFP.

The yield on the notes due April 2015 rose to an average of 3.532 percent compared to 2.81 percent the last time such bonds were issued in March when Spain raised 4.5 billion euros (5.8 billion dollars), he said.

"We did not expect that it would go this well," the source said.

Spain had said it expected to raise between two and three billion euros.

The successful sale of Spanish government debt will likely ease invstors' immediate fears of contagion from Greece's fiscal woes, which have caused stocks and the euro to fall in recent days.

It was the first time that Spain returned to the bond market since ratings agency Standard & Poor's cut the country's long-term credit rating to "AA" from "AA+" on April 28 on fears the country's poor growth prospects could further weaken its public finances.

Spain's economy, which is more than four times the size of Greece, has been contracting since the second quarter of 2008 following the collapse of a property bubble.

The public deficit reached 11.2 percent of gross domestic product last year, almost four times the limit of 3.0 percent imposed on the 16 nations that use the euro single currency, compared with 13.6 percent for Greece.

© 2010 AFP

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