Spain has been able to mop up billions of euros (dollars) in another debt auction, but it has to pay sharply higher borrowing rates. Investors appear uncertain about the country's ability to get its act together.
Spainon Tuesday successfully raised 3.178 billion euros ($4.18 billion) in an auction of 12 and 18-month debt bonds. The sum was above the targeted range of two to three billion euros, Bank of Spain figures showed.
But the country was forced to accept what some analysts called exorbitantly high borrowing rates. Yields on 12-month debt soared to 2.623 percent from 1.418 percent during a similar auction on March 20. The rate on 18-month bills jumped to 3.110 percent, up from 1.711 last month.
Investors remain unimpressed by Spain's efforts to consolidate the budget, while at the same time trying to stimulate growth - much needed to curb record-high unemployment. Tuesday's debt sale preceded an even more important auction of benchmark 10-year government debt on Thursday in which Madrid is hoping to raise up to 2.5 billion euros.
No foregone conclusion
"Tuesday's results do not guarantee a positive outcome as regards the more important litmus test for Spanish investor appetite looming in the form of Thursday's sales," analyst Richard McGuire from Rabobank told Reuters news agency.
The government in Madrid had promised to cut the public deficit to 5.3 percent of GDP in 2012 and 3.0 percent in 2013. Economics Minister Luis de Guindos insisted Spain would not need to ask for an international rescue plan.
"Spain is not going to ask for any bailout, no intervention will take place," Guindos said in an interview with the conservative daily El Mundo.
In the first three months of the current year, Spain's Treasury was able to raise 50 percent of its overall financing needs for 2012. Domestic banks said they already had enough liquidity to make interest payments for the next two years.
hg/ sgb (Reuters, dpa, AFP)