Spain borrows €2.5 billion short term

Spain borrowed €2.5 billion in three- and six-month bonds yesterday and the interest rates it had to pay fell sharply on strong demand, after a debt rescue for Greece.

Demand totalled €14.8 billion, enabling the treasury to raise the amount at the top end of its target range of €1.5-€2.5 billion.

Crucially, interest rates fell from the levels at a similar bond issue on January 24 and are now below the symbolic one percent mark.

The rate for the three-month bond was set at 0.396 per cent, down from 1.285 in January, while the six-month bonds carried a 0.764 per cent rate, compared to 1.874 per cent in the previous issue. Spain has seen its global financing costs decline in recent weeks and has used the friendlier conditions to borrow more than expected.

The country has already completed more than a third (34 per cent) of its requisite lending programme for 2012.