Spain Raises

Arthi Gupta
18 Oct, 2012
New York City

The European indexes traded sideways ahead of the EU summit in Brussels. Spain raised

[R]3:30 PM Frankfurt – The European indexes traded sideways ahead of the EU summit in Brussels. Spain raised €4.61 billion in a bond auction today at lower borrowing costs and bad loans at banks surged 10.5% in August. Cyprus rating was lowered by three notches.[/R]

European indexes traded sideways ahead of a two-day EU summit starting in Brussels today.

Spanish borrowing costs fell in an auction today and a rating agency S&P cut Cyprus'' credit rating to near junk status on the nation’s inability to strike a bailout deal with the troika.

Spanish banks'' bad loans surged 10.5% to €178.6 billion of the total lending in August, the latest data from the Bank of Spain showed.

German Chancellor Angela Merkel while speaking at the lower house of Parliament proposed setting up of a new fund to help European countries in fiscal distress and also urged that the European Union be empowered to monitor national budgets.

Standard and Poor''s downgraded Cyprus'' long-term sovereign credit rating by three notches to ''B'' from ''BB'', with a ''negative'' outlook and said that the nation has not formalized a deal with the troika despite a bailout request in June.

Cyprus''s finance minister Vassos Shiarly said on Wednesday that the talks with the troika will start by next week.

In Paris trading, the CAC-40 Index fell 13.41 or 0.4% to 3,514.09 and in Frankfurt the DAX Index edged higher 21.70 or 0.3% to 7,416.28.

The yields on Spain’s benchmark 10-year declined 6 basis points to 5.41%. Italian 10-year yields were at 4.8%.

Spanish Bond Auction

Spain raised €4.61 billion in a bond auction of securities maturing in 2015, 2016 and 2022 at lower borrowing costs, more than the target of €4.5 billion set for the sale.

The country sold €1.513 billion of bonds maturing in January 2022 at an average yield of 5.458% compared with an average yield of 5.667% at the previous sale on September 20. The bid-to-cover ratio fell to 1.88 from 2.85 in the last auction.

The Spanish Treasury also sold €1.637 billion of bonds maturing in July 2015 at an average yield of 3.227% compared to 3.676% at the previous auction September 6. The bid-to-cover ratio rose to 2.61 from 1.76.

The nation sold €1.464 billion of bonds maturing in October 2016 at an average yield of 3.977% compared to 4.603% last time. The bid-to-cover declined to 1.88 from 2.85.