The Spanish government sold more than its maximum target at a debt auction on Thursday amid investor optimism despite the Standard and Poor’s mass downgrade of euro zone countries last week.
The Spanish Treasury sold more than 6.6 billion euros ($8.46 billion) of bonds with maturities of up to 10 years drawing higher than expected demand from investors at yields roughly in line with market expectations.
The 10-year bond issue was its first this year and the biggest test of market sentiment for euro zone bonds this year. The 2022 bond sale raised 3 billion euros at 5.403 percent. At the last auction in mid-December yields were at 6.975. The bid-to-cover ratio was 2.2 versus the previous 1.5 BTC.
Even before the official auction results were released, the euro rose against the dollar and hit a two-week high at 1.2907, the highest level since January 5.
This was the first bond auction for Spain since the Standard and Poor’s downgrades on Friday. Also optimism is high on the Greek debt talks which are underway since Wednesday. Greek government began a second day of talks with private creditors in a push to reach an accord to slash the nation’s debt.