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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.