The Treasury in Madrid will consider ways of diversifying its funding methods with instruments such as longer-dated bonds, inflation-linked bonds or dollar bonds if positive market sentiment continues, said the official, who asked not to be named in line with government policy.
The yield on Spain’s benchmark 10-year bond has fallen about 300 basis points since European Central Bank President Mario Draghi pledged to support the euro in July 2012. Still, with the economy shrinking, the government is struggling to deal with its fiscal burden. The European Commission forecasts that debt will rise to 97 percent of output next year from 84 percent in 2012.
Spain’s public-debt target continues to be 91.4 percent of gross domestic product at the end of 2013, even after the ratio rose to 89.6 percent in May, the Economy Ministry said today.
Spain’s 10-year yield rose three basis points to 4.72 percent at 11:37 a.m. in Madrid. The Treasury has sold 85.3 billion euros ($112 billion) of medium- and long-term debt and 59.9 billion euros of bills this year, according to the official. That compares with a maximum 2013 target of 230 billion euros, the official said.
Excluding short-term bills, Spain has completed 70.3 percent of planned medium- and long-term funding, according to the Economy Ministry.
The Treasury is due to hold an auction of three-year, five-year and 10-year bonds tomorrow. Economy Minister Luis de Guindos said yesterday he expects a good result from the sale. He also said the euro region’s fourth-largest economy is beginning to recover and there are signs domestic demand is stabilizing.
The Treasury’s borrowing costs rose in a sale of six and 12-month bills yesterday. That auction came less than a week after Spain sold a 15-year bond through banks, the longest-dated syndicated security since 2011.
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