Spain succeeded in reaching its maximum €3 billion target in a five-year bond sale today, although it paid sharply higher rates than in the last such auction in November.
However, the yield was lower than the market rate at yesterday's close of business, and analysts said Spain appeared to have passed the latest test of its credit standing on the financial markets.
Spain is desperate to dispel fears of a debt emergency that would shake the foundations of the euro. Spain, the fourth-biggest economy in the euro zone, equal in size to Ireland, Greece and Portugal combined, must show it can access market financing at affordable rates or re-ignite speculation it will need an international bailout.
On the eve of the Spanish issue, Portugal's government raised some hopes by raising €1.25 billion with strong interest and with rates that were high but below a psychological fear threshold of 7%.
The Spanish Treasury today sold €2.999 billion of five-year bonds, at the top of a hoped-for target range of €2-3 billion. Demand outstripped supply by two to one.
The average yield was 4.542%, up sharply from 3.576% in the last auction on 3.576%, but down from yesterday's market rate of 4.767%.
The auction 'went well' since Spain reached top of its sale target and the yield was lower than yesterday's rate, analysts said.
Italy raises €6 billion at higher rate
Italy raised €6 billion in bonds today at unexpectedly high rates, against a background of high tension over the euro zone debt crisis.
The Treasury issued €3 billion in five-year bonds and €3 billion in 15-year bonds, the Bank of Italy said in a statement. The yield was 3.67% for five-year bonds compared to 3.24% at the last sale, and 5.06% for the 15-year bonds compared to 4.81%.
The amount raised was the maximum expected in a critical test for Italy's credibility in the financial markets.
The sale reflected the new confidence of investors reassured by Portugal's successful bond sale yesterday. The auction was over-subscribed, with the Treasury receiving €8.5 billion in bids.
