Spain sells more bonds than expected, paying 1% less

MADRID | The Spanish investment website Consenso del Mercado reported about the Spanish Treasury’s positive results in placing its bonds on Tuesday. Spain’s public Treasury sold over €4.941 billion in bonds at 12 and 18 months, more than expectations marked, at considerably lower rates than in previous auctions. This means that Spain has passed the first market test after the agreements that were reached last week in Brussels.

With this sale, the agency under the Ministry of Economy and Finance has exceeded its forecast to obtain between €3.25bn and €4,250bn despite the persistent lack of confidence among investors. The demand, in this case, has been very high, of over €18bn.

More specifically, the Treasury has placed €3.443bn in one-year bonds of the €10.824bn requested by investors. The interest rate in this case only reached 4.086% compared to the previous action when it reached 5.20%, and the average rate maintained itself at 4.050%.

Also, €1.498bn were obtained for bonds at 18 months, from the €7.452bn that were requested. The interest rate decreased from the previous 5.32% to the present 4.25%, while the average rate was 4.226%.

Therefore, the Treasury has managed to relax the maximum interest rates of the previous auction for bond of this type in November, when it had to offer an interest rate above the 5% mark to be able to close the session due to the tension in the markets.

The Treasury will face a new test next Thursday, when it will issue more bonds. Spain hopes to sell between €2.5bn and €3.5bn. As a result of these auctions, the agency aims to obtain up to €7.75bn from the capital markets throughout the week.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.