Spain Yields Plummet, EFSF Bills Meet Strong Demand After Greek Bailout Deal

Spain saw its borrowing costs decline significantly on Tuesday in the first debt auction held by a Eurozone country after leaders agreed a deal for a second bailout for Greece. The Eurozone bailout fund also held a successful auction during the day, with strong demand for the debt.

The Spanish Treasury raised EUR 2.5 billion from the sale of its 3- and 6-month Treasury Bills and matched the upper end of its target range of EUR 1.5-EUR2.5 billion. The auction attracted bids totaling EUR 14.835 billion.

The country sold EUR 1.736 billion of 3-month paper at an average yield of 0.396 percent, down from 1.285 percent in a sale on January 24. The bid-to-cover ratio fell to 4.04 from 4.32.

The agency placed EUR 764 million 6-month bills at an average yield of 0.764 percent, much less than the 1.847 percent paid in the January sale. Demand was robust at 10.2 times the offer, up from 6.87 last month.

Elsewhere today, the European Financial Stability Facility (EFSF) raised EUR1.99 billion at a sale of its 6-month bills. The sale attracted bids exceeding EUR 6.208 billion.

The EFSF paid a yield of 0.1908 percent, down from 0.2664 percent in a sale on January 17. The bid-to-cover ratio was 3.1, unchanged from the previous auction.

It was the third bill auction by EFSF. The fund had carried out a 3-month bill auction in December. The auction was carried out by the German Finance Agency using the Bundesbank's EFSF bidding system. (Provided by RTTNews)