Foreign Investors Cut Spanish Bond Holdings Most in Four Months

Non-resident investors offloaded Spanish bonds at the fastest pace in four months in July as the debt crisis intensified.

They reduced their holdings to 173.1 billion euros ($218 billion), or 34.8 percent of the total, from 182.1 billion euros, or 36.1 percent, in June, the debt agency said on its website today. Their share of all bonds and bills fell to 34.1 percent from 35.2 percent as Spanish banks increased their share to 32.3 percent from 30.9 percent.

Spain is losing foreign investment at the quickest pace since the start of the euro as the failure to stem the sovereign debt crisis fuels expectations it will be the next nation to seek a full bailout. The exit has sent stocks to 2003 levels and borrowing costs to record highs, while European Central Bank data show private-sector deposits fell the most on record in July.

--Andrew Atkinson, Leon Mangasarian

To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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