Spain pays lower costs as bond market heals

MADRID - Agence France-Presse

Brokers look at the displays at the Stock Exchange in Madrid in this file photo. AP Photo

Spain’s borrowing rates tumbled yesterday in a sale of its medium-term bonds, the central bank said, a fresh sign of easing market confidence as the country fights to stabilize its finances.

The Spanish treasury borrowed 4.56 billion euros ($5.99 billion) by selling the three- and five-month bonds, slightly exceeding its target of 3.5-4.5 billion euros as it took advantage of the lower rates.
Demand from investors was more than double the amount on offer, at 10.5 billion euros.

It was the eighth debt auction in a row in which Spain’s borrowing costs declined.

The country, which has the eurozone’s fourth-biggest economy, has now completed almost a quarter of the 86 billion euros’ worth of medium- and long-term bond sales scheduled for 2012.

Buyers have been flush with cash since the European Central Bank last month extended nearly half a trillion euros in three-year loans to eurozone banks at rock-bottom rates.

In yesterday’s sale, the rate of return on the three-year bond fell to 2.86 percent from 3.38 percent at the last comparable auction.

crisis,