Spain managed to sell all the government bonds it wanted at its latest auction – 2.5 billion euros worth.
But investors’ worries about the state of the economy and the struggles Madrid is having to tame its deficit meant a rise in the bond yields, that is the amount of interest offered.
Spain has again slipped into recession and the economy has been contracting or showing minimal growth for four years.
It is not under too much pressure as, including earlier issuance, the government has now raised half of its gross target for this year.
It has benefited from market liquidity after Europe’s banks took more than a trillion euros of ultra-cheap three-year cash (LTRO) from the European Central Bank in December and February.
“A reasonable set of results, which will go some way to allaying fears the domestic bid for Spanish bonds has dried up. That said, as evidenced by the accepted yield on the 10-year, this support does come at a price,” rate strategist at Rabobank Richard McGuire said.
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