Monday 19 February 2018

Spain sells €5bn of bills as yields advance

Spain sold €5bn of Treasury bills, less than the maximum target of €5.5bn set for its regular monthly auction, the Bank of Spain said.

The Treasury sold €3.73bn of 12-month bills at an average yield of 2.363 percent, compared with 1.842 percent when the securities were last sold on October 19.

It also sold €1.24bn of 18-month bills at 2.664 percent compared with 2.009 percent last month. Demand for the 12-month paper was 1.9 times the amount sold, compared with 2.06 times in October, and 3.66 times for the longer-dated bills, up from 2.03 last month.

Spain is facing higher borrowing costs as the capital needs of Ireland’s banking industry threaten to deepen the sovereign debt crisis that was triggered by Greece.

Euro zone finance ministers meet today in Brussels while European Central Bank officials urge Ireland to tap the €750bn fund created in May to prevent the crisis from spreading.

The extra yield investors demand to hold Spanish 10-year benchmark bonds instead of German equivalents rose 5 basis points today to 199 basis points.


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