(Adds Bank of Spain data, comment, details)
By Paul Day
MADRID, April 24 The cost for Spain to sell
medium- and long-term debt fell to its lowest on record on
Thursday as investors hunt for returns and after the Bank of
Spain said economic output growth gained pace after two years of
The Treasury sold 5.6 billion euros ($7.74 billion) of bonds
at yields not seen since at least the start of the euro currency
zone while investors speculate the European Central Bank will be
forced to implement measures to combat low inflation and a
Spain concentrated on the longer-dated 10-year benchmark, as
the Treasury works to extend average maturity. The bond sold 2.6
billion euros at an average yield of 3.059 percent. That's a
long way from the over 7.5 percent recorded at the height of the
debt crisis in 2012.
The Treasury also sold 1.3 billion euros of a 3-year bond at
a yield of 1.022 percent and 1.6 billion euros of a 5-year bond
at a yield of 1.663 percent.
Strong demand for Spanish debt at the auction was due to
growing confidence in the economy, hopes the ECB will embark on
a quantitative easing programme and rising optimism amongst the
ratings agencies, said strategist Annalisa Piazza, of Newedge
Following the sale, the Treasury has sold more than 43
percent of its bond issuance target for this year.
The Bank of Spain said earlier on Thursday it expected the
economy grew 0.4 percent quarter on quarter in the January to
March period, twice the rate registered just a quarter earlier.
The economy grew 0.5 percent year on year, the Bank said. If
confirmed, it would mark the first annual growth for any quarter
since mid 2011.
Spain's economy has been shrinking or stagnated since a
property bubble burst in 2008, though emerged from the latest
two-year recession in the second half of last year and is
expected to register growth of around 1 percent this year.
($1 = 0.7231 Euros)
(Reporting by Marius Zaharia in London)