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Spain raises 4.2 bn euros in bond auction at lower rates

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(Globalpost/GlobalPost)

Spain raised 4.228 billion euros ($5.659 billion) of medium and long-term bonds Thursday, more than it had targeted, at lower interest rates, a sign that investors are more confident about the government's handling of its finances.

The Treasury sold 2.568 billion euros of 10-year bonds at an average yield of 5.202 percent, down from 5.29 percent at the last similar auction held on December 5.

It sold 1.112 billion euros in two-year bonds at an average yield of 2.54 percent, down from 2.823 percent from the last similar auction held on February 7.

It also raised 548 million euros in six-year bonds at an average yield of 4.275 percent. Yields are not comparabe in this case as it was the second part of an auction of the bonds due October 31, 2019.

The Treasury had expected to raise 3.0-4.0 billion euros in the bond auctions.

Spain cut its public deficit below seven percent of gross domestic product in 2012 and escaped financial "disaster", Prime Minister Mariano Rajoy told parliament on Wednesday during a state-of-the-nation address.

"We have left behind an imminent threat of disaster," he told parliament in a state-of-the-nation address.

Rajoy said his tough deficit-cutting measures had brought the deficit down from 9.4 percent of GDP in 2011 to below 7.0 percent in 2012 -- against a 6.3-percent target set by the European Union.

The risk premium that measures the difference in rates on the open market between Spanish 10-year bonds and safe-haven German ones stood at 357 points on Thursday, compared to 353 points on Wednesday night.

The Treasury estimates its gross financing needs at 215-230 billion euros in 2013, after borrowing a total 249.6 billion euros in 2012.

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http://www.globalpost.com/dispatch/news/afp/130221/spain-raises-42-bn-euros-bond-auction-at-lower-rates