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Spanish bond sale reaps rich rewards

Spain's economy received a much-needed shot in the arm on Thursday with the government raking in €5.03 billion ($6.6 billion) via the sale of medium- and long-term bonds at lower interest rates than expected.

Spanish bond sale reaps rich rewards
Spain's economic ministry is upbeat about the result of Thursday's bond sale.

In what is the latest sign of improved investor sentiment regarding the country's ability to manage its finances, the Treasury managed to offload €2.435 billion worth of 10-year bonds at an average yield of 4.957 percent, down from 5.222 percent at the last similar auction on February 21.

It was the first time that the yield on Spanish 10-year bonds have fallen below five percent since November 2010, the economy ministry noted in a statement.

Spain's borrowing costs have fallen since the European Central Bank announced back in September it was ready to buy an unlimited sum of bonds to curb borrowing costs for troubled member states that accept strict conditions.

The risk premium — the extra rate demanded by investors in Spanish 10-year bonds over the rate offered by equivalent German bonds — stood at 348 basis points, down from 355 basis points when markers closed on Wednesday.

Investor confidence in eurozone nations declined after a general election in Italy last month ended in political deadlock, with the majority of voters backing anti-austerity platforms of former prime minister Silvio Berlusconi and comedian Beppe Grillo.

But an agreement reached by European finance ministers on Tuesday to give Ireland and Portugal more time to repay emergency bailout loans has improved sentiment for all heavily indebted nations that use the euro, including Spain.

The Treasury sold €2.026 billion in five-year bonds at an average yield of 3.612 percent, down from 4.169 percent during the last comparable auction on February 7th.

It also raised €568.9 million in three-year bonds at an average yield of 2.68 percent, down from 2.77 percent on January 17th.

The Treasury had expected to raise € 4.0–5.0 billion via the bond auctions, but demand ended up outstripping supply by 2.6 to one.

The Treasury has already taken in €35.5 billion, or 29.3 percent of the total amount it has planned to raise through medium and long-term bond auctions this year, the economy ministry statement said.

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Elderly deaf and dumb couple face eviction over son’s debt

The proposed eviction of an elderly couple who are deaf and dumb and can’t read or write because they unwittingly acted as guarantors for their son’s bank loan has sparked public outcry in Spain.

Elderly deaf and dumb couple face eviction over son's debt
Photo: Benjamin Pleguezuelos / change.org

Bankia made the decision on Monday to cancel the eviction of an elderly couple who are disabled and illiterate after bowing to public pressure and a change.org petition that collected 220,000 signatures in just 48 hours.

Last month Maria del Carmen Lebron, 81, and Antonio Pleguezuelos, 76 who have lived in their home in the Madrid suburb of Pinto since 1970 were given an eviction notice as Bankia called in an outstanding debt owed by their son Gregorio.

It was only then that they learnt that in 2005 they had signed documents acting as guarantors for a €219,500 mortgage for their son, even though they hadn’t understood what they were signing.

In fact the mortgage agreement states that the contract was read out to the couple by a notary and that they had fully understood and agreed the terms. Their lawyers now argue that the agreement was invalid as both are completely deaf – Antonio lost his hearing when he was four years old after falling ill with meningitis and Maria del Carmen was deaf since birth.

When their son lost his job in the crisis and fell behind on mortgage payments the bank called in the debt and demanded they leave their house by January 30th 2017.

  Their eldest son Benjamin made the case public starting a petition on change.org which garnered more than 200,000 signatures in just 48 hours and made headlines across Spain.

On Monday, Bankia announced that it had stopped the eviction order and would cancel the debt “given the particular vulnerability observed in this case”.

The case highlights the still ongoing plight of indebted homeowners suffering years of unemployment as a result of Spain’s economic crisis.

During the peak of the eviction crisis as banks called in loans, hundreds of families were evicted each day. In 2013, some 50,000 families were turfed out of their homes.

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