Political scandal, economy cost Spain at bond auction
By Paul Day
MADRID (Reuters) - Spain's funding costs climbed at a bond auction on Thursday after a corruption scandal touching Prime Minister Mariano Rajoy's party and concerns over the country's weak economy tempered investor enthusiasm.
The costs remained far from crisis levels, however, and demand was solid.
The Treasury paid almost half a percentage point more for its shorter-dated debt at a triple bond sale from just four weeks ago. But at around 2.8 percent, two-year yields were a shadow of last summer's euro-era highs above 7 percent.
The auction also means Spain had sold 19 percent of its full-year medium- and long-term funding target, the economy ministry said.
"The result of today's auction reflects the recent shift in sentiment towards Spain - a marked increase in yields after months of declines," said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London.
But he said that Spain should be pleased by the results given the current economic and political problems.
Yields have jumped back up to mid-December levels in Spain and elsewhere in Europe, as an economic downturn spreads around the entire euro zone and recovery outside the region is boosting demand for high-yielding assets.
France's long-term bond yields also rose in their latest debt sale on Thursday, for example. Continued...