Spain’s borrowing costs rose yesterday in a sale that included benchmark 10-year bonds, the central bank said, reflecting unremitting tension over its financial stability that is rattling the eurozone.
In an auction that raised a total €3.132 billion in 10-, four- and two-year bonds, the average 10-year yield was 6.647 per cent, up from 6.430 per cent in the last comparable auction on July 5, the Bank of Spain said in a statement.
The bank managed to raise more than the targeted range of €2 to €3 billion but was forced to offer investors higher rates on the 10- and four-year bonds.
On the four-year bond the average rate rose to 5.971 from 5.536 per cent on July 5, the bank said. On the two-year bond it fell to 4.774 per cent from 5.204 per cent recorded in the last comparable sale on July 19.
Demand was high, with investors bidding for a total of €8.48 billion.
Yields on Spain’s 10-year bonds, a benchmark indicator of confidence in a country’s financial stability, also rose in the secondary market yesterday to 6.656 per cent, well above the six per cent level considered a danger mark by economists.
The Madrid stock exchange was stable yesterday morning following the auction results, with the IBEX-35 index of leading shares down 0.02 per cent.
The head of the European Central Bank Mario Draghi last week calmed financial markets by promising the institution would do “whatever it takes” to save the euro amid warnings by economists that debt pressures threaten to break it up.
Despite tens of billions of euros in painful deficit-cutting measures announced by the government, Spain’s borrowing costs have risen to unsustainable levels over recent weeks, prompting economists to warn that it may need a full international bailout.