Treasury pays highest rates of year for short term bills

Uncertainty over the US Federal Reserve’s announcement that it is going to start scaling back its asset-purchase program has not only sent equity markets down, but also had an effect on Spain’s last debt auction in June. On Tuesday, the Treasury had to offer the highest yields so far this year on short-term paper, to sell 3.074 billion euros of three- and nine-month bills.

Just two months ago, the debt-management arm of the Economy Ministry was able to take advantage of an improvement in market conditions, selling three-month bills at 0.15 percent, the lowest marginal interest rate on record. On Tuesday, however, it sold 934 million euros of three-month bills at 0.9 percent, which was still at a much lower rate than the average for 2012, which came in at 1.3 percent, given the fears last year over the euro.

The nine-month bills, which were introduced by the Treasury this year, also were sold with the highest yield so far this year, at 1.49 percent, almost double the rate seen at an auction in May, when 2.140 billion euros of bills were sold.

The amount sold was slightly above the Treasury’s target of 3 billion euros, with a level of demand of 2.6 times the amount offered.

The auction marked the completion of the Treasury’s planned debt emissions for the first half of the year, with 65 percent of its borrowing needs covered for 2012.