Chemistry Board

Spain Sells $6 Billion Debt

Spain sold 4.76 billion euros ($6.06 billion) of debt, including the longest-maturity security it has auctioned in more than a year, even as weak demand prompted a slump in prices after the sale.

The Treasury in Madrid beat its maximum target of 4.5 billion euros. Still, demand for a new five-year benchmark was 1.57 times the amount sold, compared with 2.55 when similar debt was sold last month, and the yield rose to 4.81 percent after the auction from an average 4.68 percent at the sale.

“We’re in something of a stalemate, which is fine for now, but going into 2013 with the new supply, there’s a risk the market forces Spain into a bailout,” Harvinder Sian, a senior fixed income strategist at Royal Bank of Scotland in London. Prime Minister Mariano Rajoy is keeping investors guessing as to whether he will seek a European bailout that would allow the ECB to start buying Spanish bonds. Central bank policy makers meet in Frankfurt today as Rajoy presses the ECB to go beyond the rules it has set for itself and say how much it would intervene to cut borrowing costs if he did ask for help.

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