Demand exceeds Spain’s bond sale

MADRID | The Spanish Treasury once again took advantage of the moderation of the interest rates and the high demand to place €5,639.92 million in bonds, more than expected, with the intention of preventing a more complicated situation in 2012, according to Bank of Spain data. The Treasury’s expectations were exceeded for the third consecutive time in December since it was hoping to obtain between €3,500 and €4,500 million.

More specifically, the Treasury placed €3,717.76 million of the €10,632.30 million that were demanded in bonds at three months. In this case, the rates were considerably moderate going from the previous 5.220% to the present 1.880%. The average rate was 1.735% compared to the previous 5.110%.

Also, Spain placed €1,922.16 million of the €7,801.12 requested by investors in bonds at six months. The marginal rate went from the previous 5.328% in the month of November to the present 2.530%, while the average rate was 2.435% as opposed to the previous 5.227%.

With these results, the Treasury managed to relax by more than three points the maximum interest rates reached in the issuance of bonds at three and six months in November, when they went above the 5% mark, and it was able to close successfully the last auction of the year by placing more than the expected, just like last week.

To be exact, the agency issued €700 million more in bonds at 12 and 18 months during the auction on Tuesday, after lowering the interest by almost 1% and obtaining a high demand that was above €18,000 million.

What was even more surprising is what happened during the issuance on Thursday, when the agency under the Ministry of Economy and Finance placed €6 billion in bonds, almost twice the expected, thanks to the high demand and the moderation of the yield for bonds in the long term.

These auctions allowed the Treasury to obtain almost €11,000 million during a week when it expected to place €7,750 million. Yet, according to the experts consulted by Europa Press, this is due to the negative expectations for the future.

Also, the auction that took place on the same day that the Spanish Congress was going to ratify the election of Mariano Rajoy as the new president of the government demonstrates that the market has received positively the general lines of the next government’s plan.

During the Investiture Debate, Rajoy announced nearly fifty measures on fiscal stability, labour market, and the consolidation of the financial sector to boost job creation and to improve competition. Among these, some stood out: the updating of pensions, the suppression of early retirements, the rationalisation of the labour calendar and bonuses for hiring young people.