Yield on 10-year government bond falls to three-year low at auction

The yield on the 10-year government bonds sold by the Spanish Treasury at Thursday’s auction was at its lowest level since September 2010 as market conditions continued to improve now that the political impasse in Italy appears to have been resolved.

Investors also seemed to shrug off the government shutdown in the United States.

The Treasury sold 1.176 billion euros in 10-year bonds carrying a coupon of 4.40 percent as the average yield declined to 4.269 percent from 4.503 percent in an auction held in September. Demand for the issue was twice the amount sold.

The Economy Ministry’s debt-management arm sold a further 1.378 billion euros in benchmark five-year bonds as the average yield declined to 3.128 percent from 3.477 percent. It placed a further 955 million euros in bonds maturing in October 2018, with the average yield falling to 2.795 percent from 3.001 percent.

The total amount of paper sold was 3.509 billion euros, slightly exceeding the Treasury’s target of 3.5 billion. Since the start of the year, the Treasury has sold 104.545 billion euros in medium- and long-debt debt, 86.2 percent of its 2013 target of 121.3 billion. Gross issues through to September amount to 175 billion out of a target of 230 billion.