Spain raises 803 mn euros in long-term debt

Spain took advantage of strengthening market confidence to borrow 803 million euros ($1.03 billion) in a special sale of extra-long-term bonds on Thursday.

The rate of return on the 28-year bonds eased compared with the last comparable sale, the Bank of Spain said, reflecting an easing of tension over Spain’s public finances.

Spain, the eurozone’s fourth-biggest economy, resisted speculation last year that it would need to be bailed out by eurozone partners and its borrowing costs have since retreated from danger levels.

In Thursday’s debt auction it sold 365 million euros’ worth of 28-year bonds at a rate of return of 5.432 percent, down from 5.696 percent in the last comparable sale on January 17.

It also sold 134 million euros’ worth of 16-year bonds at a rate of 5.224 percent and 304 million euros in 27-year bonds at 5.434 percent.

Demand from investors was 2.6 times bigger than the supply, the bank said.

Financial markets had reacted nervously last week to an uncertain election result in Italy, amid lingering concerns for the stability of the eurozone.

But indicators of confidence in Spain have strengthened again in recent days.

The rate of return on its benchmark 10-year treasury bond in the secondary market has fallen below 5.0 percent for the first time since 2010.

It stood at 4.743 percent in early trading on Thursday.

Another key measure of confidence, the rate of return on Spain’s 10-year bond compared with that of benchmark German Bunds, ticked up slightly after Thursday’s sale however.

That measure, known as the risk premium, reached 333 basis points on Thursday from 326 at the start of trading, after several days of decline that had taken it to its lowest level in more than a year.