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Spain continues to see borrowing costs rise

Date: Thursday 21 Jun 2012

Spain continues to see borrowing costs rise

The Spanish Treasury raised a total 2.22bn euros in debt, topping its maximum issuance target of 2bn euros, on Thursday morning. However, borrowing costs have surged again compared to the prior comparable debt auctions.

The Treasury issued 2014-maturity bonds for €700m at an interest rate of 4.791% compared to 2.213% in the prior auction. Demand was also higher this time around with a bid-to-cover ratio of 3.97 compared to 2.8.

Some €918m were issued in 2015-maturity bonds at a cost of 5.510%, up from the prior 4.917%. The bid-to-cover ratio was 3.18 compared to 3.0.

Meanwhile, €602m were issued in 2017 maturity bonds at a cost of 6.195%, up from the prior 4.982%. The bid-to-cover ratio was 3.44 compared to 3.1.

"The markets will find some relief in that Spain was able to raise a bit more than the top end of its target on solid demand. However, the big surge in borrowing costs (especially at the short end) considering the moderately small size of the issuance will remain a matter of concern, especially with the upcoming auctions for Spain and Italy this year," analysts at Digital Look explain.

MG

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