Bloomberg News

Spain Public Debt Rises in First Quarter Amid Deficit Struggle

June 14, 2013

Spain’s public debt load rose 19 percent in the first quarter from the same period a year ago as the government struggles to tackle the widest budget deficit in the European Union amid the second recession since 2008.

Borrowings rose to 922.8 billion euros ($1.23 trillion) at the end of March from 774.9 billion euros a year ago and 883.8 billion euros at the end of 2012, according to data released by the Madrid-based central bank on its website. That represents 88.2 percent of gross domestic product, up from 73 percent a year earlier and 84.2 percent in the previous quarter.

The European Commission last month forecast Spain’s debt load will beat the euro-area average for the first time in the currency’s history next year. Rated one to two steps above junk by three rating companies amid a sixth year of slump, the euro region’s fourth-largest economy has so far avoided a full bailout, helped by European Central Bank support.

The yield on Spain’s 10-year benchmark bonds fell 9.82 basis points to 4.51 percent at 10:25 a.m. in Madrid, compared with a euro-era high of 7.75 percent in July, before ECB President Mario Draghi first stepped in to backstop the euro. The spread with similar German maturities narrowed to 299.4 basis points from 305.6 basis points.

The central government accounted for most of the debt, while the 17 semi-autonomous regions generated 189.6 billion euros, up 2.8 percent from December. Spain’s more than 8,000 town halls’ debt was 42.8 billion euros and the state’s Social Security welfare system 17.2 billion euros.

To contact the reporters on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net; Charles Penty in Madrid at cpenty@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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