Spain raised more-than targeted funds on Thursday, with the auction inviting strong demand from investors despite budget minister saying they have lost capital markets access. Nonetheless, the yield on 10-year bonds exceeded 6 percent.
Meanwhile, France raised EUR 7.84 billion today at very low borrowing costs. Spain's treasury altogether sold EUR 2.07 billion medium to long term bonds, exceeding the EUR 2 billion target.
Spain raised EUR 611 million from the issue of bonds maturing in January 2022 at a yield of 6.044 percent. The yield rose from 5.743 percent at the prior auction on April 19. The bid-to-cover ratio increased to 3.29 from 2.42.
Spain also raised EUR 638 million from October 2014 bonds at a higher yield of 4.335 percent. Demand exceeded the offer by 4.26 times, up from 3.28 in April.
From the auction of October 2016 bonds, it received EUR 825 million. The yield came in at 5.353 percent and the bid-to-cover ratio was at 2.56 compared to 2.46 in the prior issue.
Spain's Budget Minister Cristobal Montoro earlier said they lost capital markets access due to steep risk premiums also hinting a need for European assistance for its banks. The nation is reeling under recession and a worsening banking sector crisis.
In an interview with BBC Radio, U.K.'s George Osborne called for recapitalizing Spain's troubled banks using bailout funds. Further, he said the U.K. will not be a part of any Eurozone banking union.
European Central Bank chief supports the recommendation of European Commission to directly utilize the Eurozone's permanent bailout, or European Stability Mechanism, to recapitalize the troubled banks. The International Monetary Fund has already denied that it is planning financial assistance for Spain.
The ECB has left its key refi rate unchanged at 1.00 percent on Wednesday.
France's Agence France Tresor on Thursday received EUR 3.48 billion from bonds maturing in April 2022. The yield declined to 2.46 percent from 2.96 percent at the issue on May 3. The issue was 2.024 times subscribed.
France raised EUR 1.71 billion from April 2019 OATs, EUR 1.961 billion from 2026 OATs and EUR 685 million from 2060 OATs. The AFT targeted EUR 7 billion-EUR 8 billion.
Suggesting that investors are moving towards 'safe havens', Germany's borrowing costs for five year notes fell to a record low at an auction on Wednesday.
by RTT Staff Writer
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