Spain pays higher rate in 3.311 b euro bond issue

Friday, 5 August 2011 00:13 - - {{hitsCtrl.values.hits}}

MADRID (AFP): Spain paid sharply higher rates to sell 3.311 billion euros in government bonds Thursday, a major test in the midst of a widening eurozone debt crisis.

The high rates managed to lure investors, however, with requests for the three- and four-year bonds amounting to 7.4 billion euros ($10.6 billion), outstripping supply by more than two to one, the Bank of Spain said.

Spain sold 2.2 billion euros in three-year bonds but the yield, or annual return, surged to 4.813 percent from 4.037 percent at the previous comparable auction June 2.

Nevertheless, the three-year yield was well below the 5.090-percent rate being offered on the debt markets at the close Wednesday.

The state also sold 1.111 billion euros in four-year bonds for a yield that shot up to 4.984 percent from the 2.862 percent at the previous comparable auction in October 2009.

Spain’s debt risk premium jumped to a record high Wednesday, forcing the prime minister to interrupt his holiday for a crisis meeting on the market turmoil.

The premium demanded for Spanish 10-year bonds over safe-bet German bonds surged Wednesday to 407 basis points -- the highest since the introduction of the euro in 1999 -- before easing.