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Spanish debt costs rise

Spanish debt costs rise
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Spain’s borrowing costs remain high despite the recent eurozone leaders’ deal aimed at helping the region’s most troubled economies.

The Madrid Treasury paid the highest interest rates in over seven months when it sold government bonds maturing in ten years time on Thursday.

However demand was solid which strategists said showed that Spain is still able to borrow on the markets.

Domestic banks have been the main buyers at Spanish sovereign auctions since the European Central Bank injected nearly one trillion euros of cheap credit in December and February to liquidity-starved lenders.

Spanish banks raised their holdings of domestic sovereign debt from 16.9 percent of the total in circulation in December to 29.2 percent in March.

The Treasury sold 747 million euros in the 10-year bonds at an average yield of 6.43 percent, up from 6.044 percent at the last such auction on June 7. This marked only the fourth time Spain has sold 10-year bonds this year as it has concentrated on lower, less expensive maturities which were supported by the ECB loans.