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Borrowing costs sink as investor confidence rises

AFP · 3 Oct 2013, 17:24

Published: 03 Oct 2013 17:24 GMT+02:00

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The Spanish Treasury raised €3.51 billion ($4.75 billion) in bonds of five and ten years' maturity, with demand outstripping supply by a ratio of 2.2 to one.

It raised €1.18 billion of 10-year bonds with the rate of return falling to 4.269 percent from 4.503 percent in the last comparable auction on September 5th and its lowest level for this maturity at a debt sale since September 2010.

The Treasury also raised €1.38 billion in five-year bonds at an average yield of 3.128 percent, down from 3.477 percent at the last similar auction of September 5th, and €955 million in a note maturing in January 2018 at a yield of 2.795 percent, down from 3.001 percent.

The Spanish government had expected to raise €2.5-3.0 billion in the bond auction.

With Thursday's auction Spain has now completed 86.2 percent of its insurance target for 2013, the economy ministry said in a statement.

Borrowing costs for Spain and other nations on the eurozone's periphery have eased since the European Central Bank pledged last year to buy debt of troubled eurozone members if needed.

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Spain, the eurozone's fourth-largest economy, is still struggling to overcome the aftermath of a decade-long property bubble that imploded in 2008, destroying millions of jobs and sending debt levels soaring.

The government has said it expects the economy to emerge from a two-year recession in the third quarter and will post growth of 0.7 percent next year.

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