By Simon Miller
Spain has got away its latest debt auctions at a lower rate despite jitters in the bond markets yesterday.
The country sold €3.56bn of 12 month debt at average yields of 2.835% compared with 3.072% in August while €1.02bn of 18 month debt was also sold at average rates of 3.072% versus 3.335%.
Both cautions saw demand steady with two bidders for every 12 month bond while 18-month saw a ratio of 3.6.
There will be relief in Madrid after a tricky day yesterday that saw its 10-year debt go above 6% for the first time since the European Central Bank announced its banking union plans over fears of a stalemate between Spain and the eurozone over bailout proposals.
After opening at 6.033, the 10-year hit a morning high of 6.056 before dropping back to 5.931 on the back of the auction (10.02BST).
Nicolas Spiro at Spiro Sovereign Strategy warned that sentiment towards Spain was beginning to deteriorate because of growing uncertainty about whether Madrid will request a bond-buying programme.
He commented: "Spanish debt auctions have an increasingly artificial feel to them as the markets, Spain and the ECB are all playing chicken with each other. Yet the fact remains that the Treasury managed to get all its debt out the door this morning, demand was solid, if unspectacular, and yields continued to fall."