Though still mired in recession, Spain has made a good start to the year in terms of selling government bonds.
In the first debt auction of 2013, Madrid raised 5.8 billion euros. That was more that it had planned and it paid a lower rate of interest than anticipated.
Spain needs to sell 121 billion euros worth of bonds this year – eight percent more that last year – to pay back lenders and to rescue its financially troubled autonomous regions.
Analyst Salvador Isasa with Inversis Bank thinks an EU bailout is still likely, but not at the same level as Greece or Portugal.
He said: “I think we had a good first auction of bonds, with very reasonable rates compared to what we have had. Now, my personal opinion is we will go forward and I would say there is a 50/50 chance of what could be described as a ‘light’ bailout.”
Spanish Prime Minister Mariano Rajoy has been trying to avoid asking for a bailout.
Reportedly there was strong demand at this bond auction from international as well as domestic investors, which potentially eases pressure on the government over aid.
Raj Badiani, analyst at IHS Global Insight, said: “Spain will continue to face a challenging sovereign financing cycle in the next few years.”
While Thursday’s auction was a positive surprise, the bigger test, analysts said, would be to raise significant amounts in 10-year or longer-term issues over the coming months.