20 February 2013

Reuters: Spain sells $2 billion in dollar bonds

Spain sold $2 billion of dollar-denominated debt in its first offering in the US currency since September 2009, taking advantage of benign markets to diversify its debt and reduce dependence on domestic investors.

Spain has one of the highest public deficits in the eurozone, and fears of overspending by its regional governments, a prolonged recession and unrest due to high unemployment drove up its borrowing costs until the European Central Bank stepped in with a pledge to buy bonds of struggling Member States.

The Treasury priced the five-year bond at midswaps +300 basis points, with most buyers coming from outside the eurozone. The country has already sold almost a fifth of its medium- and long-term 2013 debt target via a new 10-year benchmark bond sold through a syndicate, and via three auctions as yields ease from euro-era highs reached in mid-2012.

The government cut its budget deficit to below 7 per cent of gross domestic product in 2012 from around 9 per cent a year earlier, Prime Minister Mariano Rajoy said, but that was still above its European Union-agreed target.

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