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Spain's borrowing costs fall

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(Globalpost/GlobalPost)

Spain's long-term borrowing costs eased on Thursday in a bond sale, authorities said, a further sign of strengthening confidence in the country as it hopes to crawl out of recession.

The rate of return demanded by investors for the benchmark 10-year bond -- a key measure of confidence in the eurozone's fourth-biggest economy -- edged close to the record low level reached in 2010, the Bank of Spain said in a statement.

Investors snapped up more than four billion euros ($5.29 billion) in total, overshooting the Treasury's target of three to four billion euros, with demand for the bonds more than double the amount on offer.

The Treasury sold 2.41 billion euros of 10-year bonds, with the rate of return falling to 4.50 percent from 4.72 percent in the last comparable auction on July 18.

That brought the key rate closer to the record low of 4.14 percent reached in September 2010.

It also sold just under 1.6 billion euros' worth of five-year bonds, with the rate falling to 3.48 percent from 3.56 percent in the last comparable sale on August 1.

Spain's soaring borrowing costs last year raised fears for the overall stability of the eurozone but the conservative government resisted speculation that it would seek a full euro zone bailout and financial tensions have since eased.

The pace of economic contraction eased in the second quarter of this year and the government and central bank now expect the country to return to economic growth in the current quarter.

The Madrid stock exchange rose slightly after Thursday's sale, with the IBEX-35 leading share index 0.39 percent higher in early afternoon trading.

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http://www.globalpost.com/dispatch/news/afp/130905/spains-borrowing-costs-fall