Short term bond sale success
A Spanish bond auction yesterday saw high demand for three and four year bonds with rates falling dramatically.
The Spanish government sold double their expected number of bonds yesterday, amounting to just short of €10 bn at an interest rate considerably lower than last year, 3.384% on average.
The move is seen as a vote of confidence in the new government led by Prime Minister Mariano Rajoy. On Wednesday the government were able to pass €8.9 bn in austerity measures which included income tax and property tax rises. The government has pledged to cut the budget deficit target to 4.4% in 2012, although that is likely to be tougher now that the 2011 figure is expected to be 8% rather than the forecast 6%.