Most analysts still think Spain will need to call on the European Central Bank’s firing power before long, but the smooth auction could prompt Prime Minister Mariano Rajoy to wait longer than expected before seeking a bailout.
The auction of €4.8bn of bonds raised more than the targeted amount of up to €4.5bn. Finishing the 2012 bond issuance programme ahead of schedule allows the Treasury to start making headway on its plans for next year, when it needs to raise €207bn for its own needs and some €20bn more on behalf of indebted autonomous regions.
Yesterday’s sale included longer-term bonds for the first time in a year and a half, a sign that investors are prepared to bet over a longer horizon on one of the economies worst hit by the Eurozone crisis, mired in prolonged recession. However those 20-year bonds, which raised €731m, yielded 6.33 per cent, high by historical standards.
The bulk of the sale – €3.04bn – came from a new five-year bond yielding 4.68 per cent. The Treasury’s borrowing cost fell on a 2015 bond, which sold €992m at an average 3.66 per cent yield, compared with a 3.96 per cent yield when last sold on 4 October.