Spanish Borrowing Costs Decline in $7.8 Billion Bill Sale
Spain's prime minister Jose Luis Rodriguez Zapatero is betting on the publication of stress tests on July 23 to bolster confidence in the nation’s lenders. Photographer: Denis Doyle/Bloomberg
Spain sold 5.5 billion euros ($7.1 billion) of treasury bills, the maximum set for the auction, as higher demand lead to a drop in the country’s borrowing costs.
Spain sold 4.34 billion euros of 12-month bills today at an average yield of 1.836 percent, compared with 2.221 percent on July 20, as demand was 2.47 times the amount sold, up from 1.95 last month. It also sold 1.17 billion euros of 18-month bills at 2.078 percent, compared with 2.331 percent last month. The bid- to-cover ratio was 3.86, up from 2.44 in July.
The yield premium investors demand to hold Spain’s 10-year debt over comparable German bonds fell to 182 basis points after the auction, from 187 basis points yesterday. That compares with a closing level of 221 basis points on June 16, a euro-era high.
The target range for today’s auction was 4.5 billion euros to 5.5 billion euros.
To contact the reporter on this story: Paul Tobin in Madrid at ptobin@bloomberg.net
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