Spain and Italy borrowing rates soar in latest auctions
Updated: 12:09, Tuesday, 24 April 2012
rte News.ie
Borrowing costs for both Spain and Italy rose today in their latest auction of government bonds.
Spain's borrowing rate nearly doubled in a short-term debt auction as investors fretted over the euro zone's determination to deal with its debts.
And Italy raised nearly €3.5 billion in a short-term bond sale today but at sharply higher interest rates amid fresh concerns over the euro zone outlook, the Bank of Italy said.
The Spanish treasury said it raised €1.933 billion but the timing could hardly have been worse, with financial markets slumping on concern that Europeans are wavering in their commitment to austerity.
The sale of three-month and six-month bills came a day after Spain's central bank declared the country had plunged back into recession in the first quarter of 2012.
Markets were shaken after a first round of French presidential elections on Sunday put Socialist Francois Hollande, who wants the euro zone to focus on growth rather than austerity, ahead of incumbent Nicolas Sarkozy. The two contenders face off in a final vote May 6.
Further undermining stability, the Netherlands' government collapsed yesterday after failing to reach agreement over austerity measures, placing its AAA credit rating at risk. But Spain still managed to lure strong interest in the auction with overall demand outstripping supply by more than four-to-one.
More: http://www.rte.ie/news/2012/0424/spain-borrowing-rate-soars-for-short-term-debt.html
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