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Dublin: 11°C Wednesday 21 October 2020
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Belgium, Spain and bailout fund perform better in bond auctions

There’s little respite for Greece, though, which is asked to pay a higher yield on an experimental auction of short-term bonds.

Today's bond auctions were closely watched by observers, hoping to see whether last week's EU deal was enough to calm investors' fears.
Today's bond auctions were closely watched by observers, hoping to see whether last week's EU deal was enough to calm investors' fears.
Image: Antonio Calanni/AP

THREE EUROPEAN ECONOMIES have seen their costs of borrowing fall this morning as they successfully raised cash through short-term bond auctions this morning.

While Belgium and Spain – both of whom have appointed new governments this month – and the eurozone bailout fund all saw their costs fall, there was little comfort for Greece which faced penal interest rates at its own experimental short-term auction.

Spain’s auction fared best, with the national treasury raising €850m more than expected by taking advantage of relatively low interest rates for 12-month borrowings.

The treasury was asked to pay an average of 4.050 per cent interest for that borrowing, down from 5.022 per cent on the last similar occasion – while demand for the bonds was over three times the amount on offer.

Belgium, too, saw its costs fall – with the interest for its 12-month offerings falling from 3.396 to 2.167 per cent, while demand was 2.2 times the supply (up from 1.64 times in the last similar auction).

The European Financial Stability Fund raised just under €2 billion in an auction of its own, seeking to raise short-term operational cash – paying an average interest rate of just 0.222 per cent for three-month bills, with demand more than trebling the bonds up for sale.

There was no similar luck for Greece, however, which held an experimental auction of six-month bills to gauge the level of interest provided by investors.

Its auction raised €2 billion but at an interest rate of 4.95 per cent – higher than the 4.89 per cent it paid in the last similar auction, despite a small increase in demand.

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Gavan Reilly

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