Latest Spanish bond auction raises 3.5 bln euros

 

Today's auction rasied 3.46 billion euros for 10 and 30-year bonds, offered at lower interest rates to reflect improving confidence in the country's ability to manage its public debt. The treasury auctioned 2.46 billion euros of 10-year bonds at an average yield, or rate of return for investors, of 5.20%, compared with 5.446% at an auction held in December, and amtotal of 997 million euros worth of 30-year bonds at an average yield of 5.957%.

Bond with a similar term were trading at the market at 5.99%.

There have previously been concerns that Spain may require a bailout by the EU and IMF, similar to Ireland and Greece last year, which resulted in increasing bond rates, adding to the costs of the country's sovereign debt.

Fortunately those concerns seem to have passed as the government has strengthened bank balance sheets, cut spending and pushed through a number of economic reforms. Prime Minister Jose Luis Rodriguez Zapatero has said his government narrowly beat its 2010 public deficit target of 9.3% of GDP, and has promised to reduce the public deficit to 6%percent this year and to meet the EU target of 3% by 2013.