Madrid (Source: Sinikka Tarvainen dpa, Hamburg, Germany (MCT)) – Spain on Tuesday sold 3.08 billion euros (3.85 billion dollars) of government bonds at the highest interest rates since November, after the ratings agency Moody’s downgraded the long-term debt and deposit ratings for 28 Spanish banks.
Three-month bonds fetched a yield of 2.5 per cent, thrice as high as in the previous auction in May. Six-month bonds had a yield of 3.4 per cent, nearly twice as high.
Demand for the debt was 2.7 times higher than the offer.
Moody’s downgraded 28 Spanish banks by one to four notches, some of them to speculative level, citing Spain’s reduced creditworthiness and the banks’ exposure to a real estate crash.
Spain on Monday applied for a eurozone rescue for its banks. The eurozone has pledged up to 100 billion euros, though independent auditors said 62 billion euros were needed to shield the banks.
Spanish banks on Tuesday suffered losses on the Madrid stock exchange.
The risk premium measuring the difference between Spanish and German 10-year bonds was not initially affected by Moody’s downgrade, going down by five basis points to 512 basis points. dpa sit jln Author: Sinikka Tarvainen
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Source: Sinikka Tarvainen dpa, Hamburg, Germany (MCT)
