Spain bond issue raises 3bn euros but at higher rates

  • 19 July 2012
  • From the section Business
Euro flag outside crumbling building
Investors remain wary about whether Spain can rebuild its economy

Debt-laden Spain has raised 2.98bn euros (£2.3bn) on the financial markets, but was forced to pay higher interest rates.

The average yield on bonds repayable in five years rose to 6.46%, against 6.07% at an auction last month.

The average yield on seven-year bonds was 6.7%, up from 4.83% last time.

"They [Spain] sold what they wanted to sell, that's about the only good thing about it," said Monument Securities analyst Marc Oswald.

Investor demand for the bonds fell, with the issue 2.1 times oversubscribed, compared with 3.4 times in June.

Investors remain worried about Spain's high funding costs and whether there is a viable plan to recover from a four-year economic downturn.

Later on Thursday, German MPs were due to vote on an aid package of up to 100bn euros for Spain.

It is expected that the government of Chancellor Angela Merkel may suffer a small rebellion, but that MPs will still clear the rescue package. Mrs Merkel said ahead of the vote: "From what I am hearing, I am optimistic."

The German parliament has been recalled from its summer break to vote on the emergency eurozone action.