Spain's bonds benefit as Fed maintains stimulus

AFP - [email protected] • 19 Sep, 2013 Updated Thu 19 Sep 2013 17:27 CEST
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Spain's medium- and long-term borrowing costs eased in a bond sale on Thursday after the US Federal Reserve surprised markets by leaving its huge monetary stimulus in place.


The Spanish Treasury sold €3.1 billion ($4.1 billion) in bonds of three and 15 years' maturity, with demand outstripping supply by a ratio of 2.4 to one, the central bank said.

It sold €2.064 billion of three-year bonds, with the rate of return falling to 2.225 percent from 2.636 percent in the last comparable auction on August 1st.

The Treasury also sold €1.016 billion of 15-year bonds at an average rate of 4.809 percent, down from 5.26 percent when it launched a new 15-year syndicated bond on July 9th.

The Spanish government had expected to raise €2.0-3.0 billion in the bond auction.

Market sentiment for the bond auction was buoyed by the Federal Reserve's decision to leave its huge monetary stimulus in place and signs of improvement in the Spanish economy.

The Fed announced Wednesday it would not yet dial back its $85-billion-a-month bond-buying program, leading to global stock market rallies. Many market-watchers had expected the Fed to trim the program by $10–$15 billion per month.

Spain will raise its forecasts for economic growth and employment on September 27th as it emerges from a two-year recession, Economy Minister Luis de Guindos said on Monday.

The government's latest forecasts tip a 1.3-percent contraction in overall economic output in 2013 before a return to growth of 0.5 percent in 2014.

The Spanish economy, the eurozone's fourth largest, shrank by 1.6 percent in 2012.



AFP 2013/09/19 17:27

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