Arab Today, arab today spain borrowing costs ease after tough cuts
Last Updated : GMT 06:30:05
Arab Today, arab today
Arab Today, arab today

Spain borrowing costs ease after tough cuts

Arab Today, arab today

Arab Today, arab today Spain borrowing costs ease after tough cuts

Madrid - AFP

Tension over Spain\'s finances eased Tuesday as its borrowing rates fell after its latest tough deficit-cutting measures, with the markets looking ahead to a decisive eurozone call on rescuing its banks. The government raised 3.56 billion euros ($4.38 billion) in a sale of short-term debt, with the interest rates offered sharply lower than in the last comparable sale on June 19, Bank of Spain data showed. \"It was a very positive sale,\" Finance Minister Luis de Guindos told reporters afterwards. \"It shows that Spain still has access to the markets.\" Spain has been battered in recent weeks as sceptical investors fret over its stricken banks and the state\'s strained finances, demanding higher rates of return to hand over fresh funding. In Tuesday\'s bond sale, investors bought 12-month Spanish debt at 3.918 percent, down sharply from 5.074 percent in June, and 18-month debt at 4.242 percent, compared with 5.107 percent. The results could ease pressure on Prime Minister Mariano Rajoy, who last week announced new pay cuts and tax increases amounting to 65 billion euros in order to cut the public deficit. The debt issue \"is very positive, and above all surprising, because the demand was high with this strong drop in rates,\" said analyst Daniel Pingarron of brokerage IG Markets. \"It seems that the series of austerity measures of 65 billion euros has had a positive effect.\" Spain is suffering its second recession in four years, with an unemployment rate of more than 24 percent and the latest plan has fuelled a series of protests by miners, firemen, police officers, nurses and others. The International Monetary Fund on Monday forecast that Spain\'s recession would persist in 2013. The head of the Eurogroup of eurozone finance ministers Jean-Claude Juncker, said Tuesday the body would hold a conference call on July 20 dedicated to discussing the terms of Spain\'s banking bailout. Spain\'s eurozone partners last month offered it a lifeline of up to 100 billion euros to stabilise troubled banks, laden with bad loans from the collapse of a real estate boom in 2008. The ministers are expected to outline details such as the rates charged for the loans, the timetable of the plan\'s implementation and the conditions attached to the funding. The new governor of Spain\'s central bank talked tough Tuesday on financial supervision. \"At the Bank of Spain, we did not have any success with what is known nowadays as macro-oversight, that is the role of financial guardian,\" said its governor Luis Marias Linde, who took office in June. In terms of supervision and the central bank\'s responsibilities, \"it acted indecisively, or in an insufficient and inadequate manner,\" added Linde, whose predecessor Miguel Angel Fernandez Ordonez was brought down by the collapse of one of Spain\'s biggest banks, Bankia. De Guindos insisted that Spain would not need a full-blown sovereign bailout once its banks are rescued. \"Spain is a solvent country, there will be no sovereign bailout,\" he was quoted as saying in an interview with La Vanguardia newspaper, published Tuesday before the debt auction. \"Doubts harm us and that makes our financing more difficult,\" he added.

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