There was some relatively good news for Spain today as it managed to sell more debt than it had predicted. During this morning’s debt auction the embattled country sold €2.541bn, compared with its maximum target of €2.5bn.
Spain still faces major economic problems. Despite its success today the financial markets are maintaining a pessimistic view of the situation, with many saying that today’s result must not detract from its other problems. Thanks to the auction the Spanish treasury now have some freedom to issue debt at a slower pace later in the year if its borrowing costs remain high.
Worryingly Yields on the countries 10-year bonds rose after the auction; suggesting that investors remain concerned about the country’s long-term fiscal sustainability.
“Overall, then, a reasonable set of results which will go some way to allaying fears the domestic bid [demand] for Spanish bonds has dried up,” said Richard McGuire, rate strategist at Rabobank.
Unemployment in Spain is still dangerously high at a rate of 23% and the country is predicted to enter a deep recession later in the year.
Elsewhere, the French managed to sell €8bn of debt which is close to the maximum amount possible giving president Nikolas Sarkozy some breathing space before presidential elections this weekend.
As a result of the bond auctions the Euro has stayed higher against the Dollar and Yen.
The euro was 0.2 percent stronger at $1.3147 advancing 0.5 percent to 107.14 yen.
The Euro is currently trading at 0.818 against the Pound.