Forexpros – Spain saw borrowing costs rise at a well-received auction of long-term government debt on Thursday, just days after the country warned that it is having difficulty accessing credit markets.
Spain’s Treasury sold EUR638 million worth of two-year government bonds maturing in October 2014 at an average yield of 4.335% earlier in the day, up from 3.463% at a similar auction last month.
Demand was stronger, however, with bids exceeding supply 4.26 times versus a “bid-to-cover” ratio of 3.28 in May.
The country sold an additional EUR825 million of four-year debt maturing in October 2016 at an average yield of 5.353%, up from 5.106% at a similar auction last month.
Spain also sold EUR611 million of ten-year debt at an average yield of 6.044%, up from 5743% at a similar auction last month. The bid-to-cover ratio stood at 3.29, compared to 2.42 at an auction in May.
In total, Spain’s Treasury sold EUR2.288 billion of government debt, above the full targeted amount of EUR2 billion.
The yield on Spanish 10-year bonds eased to 6.13% following the auction, down from 6.31% hit on Wednesday.
Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves.
Following the bond auction, the euro remained modestly lower against the U.S. dollar, with EUR/USD shedding 0.16% to trade at 1.2562.
Meanwhile, European stock markets remained higher. Spain’s IBEX 35 Index rallied 1.15%, the EURO STOXX 50 rose 0.4%, France’s CAC 40 added 0.5%, Germany’s DAX climbed 0.4%, while London’s FTSE 100 eased up 0.35%.
Forexpros
