Spain's debt closes 2021 with first average negative yield

MADRID, Dec 17 (Reuters) - Spain's treasury achieved a negative average yield on its debt in 2021 for the first time in history, the Treasury said on Friday.

A yield below 0% effectively means investors are paying the government to hold its bonds.

"It is the first time ever that the average cost of the debt is negative," Head of Treasury Carlos Cuerpo told Reuters.

"This was compatible to an extension of maturities that now surpass eight years and allow us to be prepared for a monetary policy normalization."

Treasury sources also confirmed a report by El Pais newspaper that Spain had earned about 100 million euros ($113.02 million) in 2021 from negative yields, now carried by about 60% of Spanish debt.

The Spanish government has borrowed a gross 264 billion euros this year, at an average cost of -0.04, according to ministry data.

According to Refinitiv data, Spanish government bonds of up to seven years' maturity have a negative yield.

A similar situation is playing out across the euro area, where almost 70% of the sovereign debt market yields less than zero.

About 44% of Spanish debt is in foreign hands, Cuerpo said.

($1 = 0.8848 euros)

Reporting by Belen Carreno, Additional reporting by Dhara Ranasinghe, Editing by Inti Landauro and Catherine Evans

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