Spain’s Debt Offering Has Modest Yields

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Spain auctioned $3.2 billion in bonds. Demand was solid. Spain paid high yields, but not as high as many had feared. Yields well above 6% would signal that the nation could not sustain the borrowing along with large deficits. The government has recently made Herculean efforts to bring down government costs.

Bonds that mature in October 2014 had an average yield of 3.463% and a bid-to-cover ratio of 3.3.

Bonds that mature on January 31, 2022, carried an average yield of 5.743%, well below the danger zone.

Markets should be cheered by the auction. It is a sign there is some hope Spain will not need a massive bailout.

Douglas A. McIntyre

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