The Spanish Treasury comfortably beat its issue target at Thursday’s bond tender as its borrowing costs fell to their lowest levels since 2010 amid ample global liquidity.
The debt-management arm of the Economy Ministry sold 4.7 billion euros in three- five- and 10-year bonds when it had set itself a goal of 4.5 billion. Bids amounted to 2.6 times the amount sold.
The auction was held just a day after the Bank of Spain announced that the outstanding debt of the country’s public administrations had risen to a record 913.602 billion euros, equivalent to 86.9 percent of GDP. Debt has now doubled from the levels in 2007 just before the crisis broke.
The cut-off rate on the benchmark 10-year bond at the auction fell from 4.919 percent at an auction held last month to 4.632 percent, the lowest rate since November 2010. The marginal yield on the three-month issue declined to 2.810 percent from 3.046 percent earlier this month, while the yield of the five-year bond dropped to 3.286 percent from 3.579 percent.
“This is a very strong auction result for Spain,” Bloomberg quoted Lyn Graham-Taylor, a fixed-income strategist at Rabobank International in London, as saying in an emailed comment. “This fits in with the overall theme at the moment of a glut of liquidity and hunt for yield seeing a strong bid for peripheral debt and a narrowing of euro-zone bond spreads.”
Since the start of January, the Treasury has now issued 52.479 billion euros in medium- and long-term debt, 43.3 percent of its program for the full year.