Thursday, 15 October 2015 15:12
MADRID: Spain easily sold 4 billion euros ($ 4.6 billion) of debt at a triple bond auction on Thursday at yields below those at previous auctions, after Standard and Poor’s raised the national debt rating to BBB+.
The ratings agency said on Oct. 2 that a strengthening economy would benefit public finances and applauded labour market reforms.
The Spanish government expects the economy to expand by 3.3 percent this year, driven by rising consumer demand after years of stagnant growth or recession. Spain has also cut its public deficit by more than a half since 2010, easing investor concerns it could not control its budget.
Economy Minister Luis de Guindos reiterated on Thursday that the government would hit its Brussels-agreed deficit target of 4.2 percent of gross domestic product despite concerns by the European Commission that it would fall short.
Spain’s government has cut taxes ahead of a Dec. 20 general election, after years of painful measures aimed at taming the deficit, prompting accusations that its fiscal prudence had slipped due to electoral concerns.
Following the auction on Thursday, the government has sold around 89 percent of its end-of-year target for medium- and long-term issuance. De Guindos also cut the Treasury’s net debt issuance target for this year to 48 billion euros from 51 billion euros.
The 10-year benchmark sold for 1.767 percent on Thursday, the lowest yield for the paper since April, while rates also dropped to six-month lows on the 2018 and 2030 bonds.
