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Spain clears bond auction hurdle

Thursday, Apr 19, 2012 - 02:10

April 19 - Spain managed to sell 2.5 billion euros of bonds at auction on Thursday, as much as it wanted, but at a cost of rising yields as the country struggles to tame its deficit. Ciara Sutton reports.

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The longer-term bond auction was an important debt hurdle and Spain passed it, raising 2 and half billion euros. But it came at a price, with existing Spanish government debt yields rising - 10-year bonds were up 4 basis points after the auction. Javier Ferrer is from Ahorro Corporation in Madrid. (SOUNDBITE)(Spanish) HEAD OF PUBLIC DEBT DESK AT AHORRO CORPORATION, JAVIER FERRER, SAYING: "Fundamentally this tells the foreign investors that there is demand in Spain for the Spanish bond in particular, that you can't speculate against a lack of demand. There is demand." Spain has now raised half of its gross target for this year after Europe's banks took advantage of cheap three-year ECB loans. But investors remain concerned about the country's deficit. Jane Foley is Senior Currency Strategist at Rabobank. (SOUNDBITE) (English) SENIOR CURRENCY STRATEGIST AT RABOBANK, JANE FOLEY, SAYING: "We do suspect that the pain in Spain could actually increase further into the spring and into the summer. If we look at the banking sector, we know that there are recessionary conditions in Spain. The IMF earlier this week predicted a 1.8 percent contraction in growth this year, and beneath that of course is the dire position of the property market meaning the markets will still be concerned about bad loans in Spanish banks." But earlier this week Eurogroup chair Jean Claude Juncker said he did not think Spain would need a bailout. (SOUNDBITE) (English) EUROGROUP CHAIR JEAN CLAUDE JUNCKER SAYING: "I am really impressed by the ambitious consolidation program Spain has launched. I don't think that Spain will need any kind of external support with no reason for Spain asking for a specific program. I would like to invite financial markets to behave in a rational way. Spain is on track." France also had a strong auction, selling nearly 8 billion euros of government bonds. Analysts say the sale met good demand aided by slightly higher yields in the secondary market on jitters over the first round of presidential elections due on Sunday. Ciara Sutton, Reuters.

Spain clears bond auction hurdle

Thursday, Apr 19, 2012 - 02:10

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