Spain sells bonds to ease fears over funds
Source: Agencies |
June 8, 2012, Friday
|
Print Edition
Print Edition
SPAIN braved funding pressures in European credit markets yesterday and raised money at an affordable if rising cost, while behind-the-scenes planning for a likely rescue of its debt-stricken banks intensified.
Madrid sold 2.1 billion euros (US$2.6 billion) of government bonds, paying just over 6 percent to sell 10-year debt, up from 5.74 percent last month. That laid to rest - at least for now - fears raised by Treasury Minister Cristobal Montoro on Tuesday that Spain was being shut out of credit markets.
Despite a rally in stocks, bonds and the euro owing partly to expectations of action by central banks to revive economic growth, the eurozone remains under pressure from investors and global partners to act decisively - and quickly - to resolve its debt crisis.
While Greece is a major concern, the most immediate threat comes from Spain, where the banking sector is hit with bad property loans and may need 40 billion euros of new capital as a bare minimum to shore it up.
"Talk of a rescue for Spanish banks is the thing that is reducing risk aversion in the markets," said Alessandro Giansanti, a bond strategist with ING bank in Amsterdam, who added that such talk had improved the environment for Spanish bonds.
France, the eurozone's No. 2 economy after Germany, continued to gain from its safe-haven status, selling 7.84 billion euros of bonds at record low yields despite announcing a partial reversal of the previous government's pension reform on Wednesday.
Madrid sold 2.1 billion euros (US$2.6 billion) of government bonds, paying just over 6 percent to sell 10-year debt, up from 5.74 percent last month. That laid to rest - at least for now - fears raised by Treasury Minister Cristobal Montoro on Tuesday that Spain was being shut out of credit markets.
Despite a rally in stocks, bonds and the euro owing partly to expectations of action by central banks to revive economic growth, the eurozone remains under pressure from investors and global partners to act decisively - and quickly - to resolve its debt crisis.
While Greece is a major concern, the most immediate threat comes from Spain, where the banking sector is hit with bad property loans and may need 40 billion euros of new capital as a bare minimum to shore it up.
"Talk of a rescue for Spanish banks is the thing that is reducing risk aversion in the markets," said Alessandro Giansanti, a bond strategist with ING bank in Amsterdam, who added that such talk had improved the environment for Spanish bonds.
France, the eurozone's No. 2 economy after Germany, continued to gain from its safe-haven status, selling 7.84 billion euros of bonds at record low yields despite announcing a partial reversal of the previous government's pension reform on Wednesday.
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