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Alvaro Barrientos/AP
Two-tier Europe

Spain sees borrowing costs rise, while France's hit euro-era lows

It’s a tale of two Europes as countries go to the bond markets this morning…

THE SPANISH GOVERNMENT has seen its cost of borrowing surge on the bond markets this morning – while its French neighbour has seen its own costs fall to the lowest of the euro era.

The Spanish treasury this morning issued a new batch of 10-year loans, sold off at an interest rate above 6 per cent – at a time when the Spanish government’s responsibility for its ailing banking sector is under particular scrutiny.

Having projected a sale of €2 billion of bonds, the treasury sold off €2.07 billion of 10-year bonds at an average yield of 6.044 per cent.

By comparison, at the last similar auction of 10-year bonds, held in April, Spain paid an average interest rate of 5.743 per cent.

Spain also raised €638 million in bonds maturing in just over two years; those bonds sold at an average yield of 4.483 per cent, compared to 3.52 per cent the last time such bonds were issued.

France, holding an auction of its own, saw its own long-term borrowing costs fall to the lowest they have been since the euro came into being in 1999.

It sold €3.48 billion of 10-year bonds at an average yield of 2.46 per cent, down significantly from the 2.96 per cent it paid only a month ago.

France also sold €685 million of long-term bonds maturing in 2060 – paying just 3.27 per cent for doing so.

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EU set to unveil new plan to protect taxpayers from bank losses

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