Spain beat its maximum target at a bill auction in Madrid today while borrowing costs fell as the government presses the European Union to ease its budget-deficit targets.
The Spanish Treasury sold 5.07 billion euros ($6.6 billion) of debt, compared with a maximum target of 5 billion euros, the Bank of Spain said. The government sold 1.19 billion euros of six-month notes to yield 0.530 percent and 3.88 billion euros of 12-month paper yielding 1.235 percent. Six-month borrowing costs fell from 0.794 percent on March 12 while 12-month borrowing costs declined from 1.363 percent.
Spanish Prime Minister Mariano Rajoy is trying to sustain the momentum of European Union reforms that will underpin the country’s finances in the face of objections from northern members of the currency union. German Finance Minister Wolfgang Schaeuble and his Dutch counterpart Jeroen Dijsselbloem this month told their euro-region colleagues the bloc will have to approve changes to its treaties before they can pool responsibility for bailing out banks.
Spain’s 2012 budget deficit rose to 10.2 percent, the most in three years, after the government had to shoulder the burden of rescuing its banking system single-handed. Economy Minister Luis de Guindos is pushing for a relaxation of this year’s target of 4.5 percent after overshooting the limit last year.
Demand for Spanish paper rose at today’s auction with the bid-to-cover ratio on the six-month paper at 3.77 compared with 3.22 in March while demand for the 12-month notes was 2.04 compared with 1.85.
To contact the reporters on this story: Ben Sills in Madrid at firstname.lastname@example.org; Angeline Benoit in Madrid at email@example.com
To contact the editors responsible for this story: James Hertling at firstname.lastname@example.org; Craig Stirling at email@example.com