Spain enjoys bond success but rescue fund hit by France woe

Ben Southwood
Follow Ben
SPAIN successfully shifted €5bn (£4.02bn) worth of short-term debt yesterday, but a bond sale for the Eurozone rescue fund was delayed by France’s Monday night downgrade.

The Spanish treasury sold €4.2bn worth of 12-month debt at a yield of 2.797 per cent, down from 2.823 per cent at the last auction, but €713m of 18-month bills went for 3.034 per cent, marginally up on 3.022 per cent last time. Still, the auction beat the government’s €3.5bn to €4.5bn target, and the auctions were heavily over-subscribed.

However the European Financial Stability Facility (EFSF) suffered a setback when its three-year euro benchmark was delayed, after France – its second largest guarantor – was downgraded from Aaa to Aa1 by Moody’s.

EFSF chief financial officer and deputy chief executive Christophe Frankel played the delay down as a technical error.

“The timing of the EFSF three-year euro offering is currently subject to a technical issue related to EFSF’s deeds of guarantee,” he said in a statement.

Apparently agreeing that the problem is not fundamental, Moody’s has kept its rating for the benchmark at Aaa, maintaining its existing negative outlook.