Brussels, 22/11/2011 (Agence Europe) - On Tuesday 22 November, the Spanish treasury issued €2.978 billion of three and six-year bonds at very high interest rates on a suspicious money market.
Compared with the last comparable emission (25 October 2011), the yield on three-month bonds doubled from 2.292% to 5.110%, while the six-month bond rate rose from 3.302% to 5.227%, but Spain was easily able to raise the planned €2bn to €3bn due to strong demand (€10.5bn), explained the Bank of Spain. The rates are higher than the market trends because on Monday, Spanish three-month bonds were trading at 1.725% at closing, and six-month bonds at 2.025%.
The increased borrowing costs had been expected because Spain has been under increased scrutiny from the markets for the past ten days and the victory of the right wing in the general elections on Sunday did nothing to calm nerves. Analysts seem to agree that only intervention by the European Central Bank would calm the storm. (LC/transl.fl)