MADRID (AP) — Spain's government has met its financing needs for the year after raising €4.76 billion ($6.07 billion) in a bond auction on Thursday.
The Treasury said it had reached the bond auction target of €86 billion although it has a half dozen more sales before the year's end. The average interest rate it has paid in auctions so far in 2012 was 3.40 percent, down from a 3.90 percent average for all of 2011.
It sold €3.04 billion in five-year bonds on Thursday at an average interest rate of 4.68 percent, down from 4.77 percent in the last such auction Oct. 4. It also sold €992 million in three-year bonds at 3.66 percent, down from 3.96 percent on Oct. 4 and €731 million in 20-year bonds at 6.33 percent.
Demand was more than double the amount offered for the five- and 20-year bonds and just under that for the three-year ones.
Spain's government borrowing rates have eased gradually in recent months since the European Central Bank said it is ready to buy Spanish bonds. The bond purchases, however, are dependent on Spain asking for a bailout from the other 16 countries that uses the euro, something Madrid has shied away from doing.
In recent weeks, Prime Minister Mariano Rajoy has said he has no immediate plans to ask for rescue aid although he does not rule out a request. Deputy Prime Minister Soraya Saenz de Santamaria said Thursday the fact that Spain had reached its borrowing target for this year would have no bearing on whether it would seek aid.
On Thursday, the interest rate for Spain's benchmark 10-year bond on the secondary market — an indicator of investor wariness of a country's economy— was at 5.8 percent, up marginally on recent days but still way down from the unsustainable highs of 7 percent it reached in July.
The auction came a day after the European Union's executive body, the Commission, predicted Spain's unemployment, currently 25 percent, would rise next year and that the country would have a deficit of 6.4 percent in 2014, more than double than pledged.
Saenz de Santamaria said the government intended to fulfill its commitments to reduce the deficit from 8.9 percent last year to 6.3 percent in 2012; 4.5 percent next year and 2.8 percent in 2014.
Rajoy's government has introduced a series of austerity measures and labor and financial sector reforms over the past 10 months to convince investors it is managing its finances. But the measures have produced much social opposition and labor unions have called a general strike for Nov. 14. It will be the second general strike since Rajoy took office late last year.
In a new cost-cutting measure, Saenz de Santamaria said the government would slash the number of official cars used by ministers, state secretaries and other officials by 66 percent, from 307 to 103, over the next two years to save some €10 million.