Spain easily raises $4.9 billion in long-term debt

AP News
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Posted: Apr 20, 2011 6:36 AM
Spain easily raises $4.9 billion in long-term debt

Spain easily raised euro3.4 billion ($4.9 billion) Wednesday at an auction of long-term debt as the country endeavors to make sure it doesn't become Europe's next bailout victim.

The Treasury said it sold euro2.5 billion in 10-year bonds at an average interest rate of 5.5 percent, up from 5.2 percent in the last such auction on March 17. Demand for the debt was more than double the amount sold.

The Treasury also sold euro885 million in 15-year bonds at an average interest rate of 5.7 percent, down from 6 percent in the last such auction in December. The auction was also roughly two-times oversubscribed.

The amount raised was more or less in line with expectations. The agency had said it hoped to auction up to euro3.5 billion in long-term debt.

The results of Wednesday's auction will likely be welcomed by the Spanish government, which on Monday had to pay sharply higher rates in a short-term debt auction.

Finance Minister Elena Salgado insisted that Monday's rate spike was temporary and stemmed from market fears over Greece's debt and speculation that Finland may block future eurozone bailouts, like the one Portugal is negotiating with the European Union and the IMF.

She said Spain would continue to introduce reforms to restore confidence its economy and cut its swollen deficit.

On the secondary market Wednesday, the yield on the country's 10-year bonds stood at 5.46 percent, making for a spread _ or difference _ of around 2.14 percentage points with the benchmark German equivalent. Though down on Monday's rate of 2.30, it's still ahead of last week's spread of 1.7 percentage points.

Meanwhile, Spain's main stock index was up 1.4 percent at midday, in line with most global markets.