Spain in successful bond auction

Written By Unknown on 20 September 2012 | 17.13

Spain's borrowing costs eased at the country's latest bond auction where it raised 4.8bn euros (£3.84bn) after selling three and 10-year bonds.

There was strong demand for the 10-year bonds, with investors bidding for nearly three times the amount on offer.

The average yield was 5.66%, down from 6.65% at the previous auction, and below the 5.95% average for the year.

The government's borrowing costs have fallen since the European Central Bank announced its bond-buying plan.

"Overall the auctions today were taken comfortably," said Nick Stamenkovic of Ria Capital Markets, "but a sustainable decline in yields really depends on the Spanish government coming up to the plate and asking for a sovereign bailout."

Investors bid for 1.6 times the amount of three-year bonds on offer, with an average yield of 3.85%, slightly higher than the year average of 3.82%.

This auction follows an earlier round of fundraising on Tuesday, when the Spanish government raised 4.6bn euros in 12- and 18-month loans on the bond markets.

On 6 September, ECB president Mario Draghi unveiled details of a bond-buying plan aimed at easing the eurozone's debt crisis.

Under the plan, the ECB would agree to buy a potentially unlimited amount of bonds of debt-stricken eurozone members on the condition that these countries made a formal request for bailout funds and stuck to the terms of any deal.

The German Bundesbank remains opposed to the idea.

20 Sep, 2012


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Source: http://www.bbc.co.uk/news/business-19660955#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
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