Spain Sells 4.94 Billion Euros of Debt, Exceeding Target

Spain exceeded its maximum target at an auction of bills and its borrowing costs were little changed from a month ago as euro region finance chiefs prepared to discuss how to plug a hole in Greece’s funding.

The Treasury sold 4.94 billion euros ($6.32 billion) of bills, compared with a maximum target of 4.5 billion euros, the Madrid-based Bank of Spain said today. Its 12-month bills yielded an average 2.797 percent, compared with 2.823 percent when it last auctioned the debt on Oct. 16. The yield on 18- month notes rose to 3.034 percent from 3.022 percent last month.

Demand for the 12-month securities was 2.12 times the amount sold, compared with 2.71 times at the previous auction and demand for the 18-month paper was 5.72 times, compared with 3.04 last month.

Prime Minister Mariano Rajoy said yesterday funding costs are Spain’s biggest problem, even as he hesitates to request aid that would allow the European Central Bank to buy its bonds. Bond yields rose for a second day today as European finance ministers sought a solution for Greece and France lost its top credit rating at Moody’s Investors Service.

The yield on 10-year benchmark bond yields rose to 5.919 percent at 11 a.m. from 5.898 percent yesterday. That compares with a euro-era record of 7.75 percent on July 25, a day after Spain signed conditions for a 100 billion-euro European credit line for its banks. The financial industry may need less than the government’s previous estimate of 40 billion euros of that aid, Miguel Temboury, Spain’s undersecretary for economy, said yesterday.

The Treasury, which has already completed its 2012 bond issuance program, is scheduled to return to the markets on Nov. 22 to auction as much as 3.5 billion euros of bonds maturing in 2015, 2017 and 2021.

To contact the reporter on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net

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

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