Spain has had no trouble selling its latest batch of government bonds. Almost 3.4 billion euros worth attracted solid demand and it was high enough that Spain’s Treasury could have sold twice as many.
Madrid did however have to boost the yield – the amount of interest it offers to investors. Analysts said that was because of the continued speculation that Greece will have to ask for more time to repay its debts. Athens denies that.
Despite the official denials, talk of Greek restructuring of its 325 billion euro mountain of debt has helped pushed Spanish 10-year bond yields to near euro era highs.
Markets remains doubtful whether Spain, with an economy twice the size of Greece, Portugal and Ireland combined, can decouple from the crisis gripping fellow high debtors in the bloc.
Spain’s Treasury issued 3.37 billion euros of bonds maturing in 2021 and 2024, at the top end of a 2.5-3.5 billion euros target, but paid 31 basis points more for the 10-year paper than in March.
A slew of austerity measures and structural reforms have helped convince markets Spain should not be grouped in with troubled euro zone peripheries Ireland, Greece and Portugal, all of which have requested aid, but doubts persist.
Neighbouring Portugal sold one billion euros of three and six month Treasury bills, at the top end of the target range though at higher yields in its first debt auction since requesting a European Union/International Monetary Fund bailout.