Spain enjoyed a bumper bond sale today, raising nearly twice the amount targeted as it grabbed the chance to lock in competitive borrowing rates in the swirling euro zone debt crisis.
Spain's treasury raised €6 billion - far above its original €2.5-3.5 billion target - in the closely watched auction, the Bank of Spain said.
Demand far outstripped the original target, with investors clamouring for a combined total €11.234 billion of the four-, nine-, and 10-year bonds that were on offer.
In the bond auction, Spain paid a borrowing rate of 5.545% for the 10-year bonds, 5.201% for the nine-year bonds and 4.023% for the four-year bonds.
When compared to the last comparable auctions in previous months, those borrowing costs were sharply lower for the four-year bond and only slightly higher for the nine- and 10-year bonds. The rates were competitive with those charged on the open market.
The result allowed the euro zone's fourth-biggest economy to mark its distance from crisis-engulfed Italy, which was forced to pay record high borrowing rates in a bond sale just a day earlier.
Analysts said that Italy is likely to face much more pressure on the bond markets than Spain in the first quarter next year. Italy had €112 billion of debt to refinance between January and March next year compared with €32 billion for Spain in the same time, they added.
Investors have shown concerns this year over Spain's debt because of doubts over its ability to repay borrowers at a time of bulging deficits and an economic slump that has created a 21.5% jobless rate.
Spain is seeking to slash its total public deficit from 9.3% of gross domestic product last year to 6% of GDP this year, 4.4% in 2012 and 3% - the European Union limit - in 2013.
S&P downgrade for Spanish banks
Rating agency Standard & Poor's has downgraded the credit ratings of 10 Spanish banks after applying new criteria, and warned that it could lower their short-term scores further.
The 10 banks had their ratings lowered and remained in "creditwatch with negative implications", indicating the risk of a further downgrade, S&P said.
The agency "reviewed its ratings on 10 Spanish financial institutions by applying its new ratings criteria and updated group methodology for banks," it said.
The change affected CaixaBank, Bankia, Banco Popular, Bankinter, Banco de Sabadell, the holding company Caja de Ahorros y Pensiones de Barcelona, Ibercaja Banco, San Caja de Ahorros y Monte de Piedad de Gipuzkoa y San Sebastian, Bilbao Bizkaia Kutxa and Banco Financiero y de Ahorros.
