The Spanish government sold 9.98 billion euros ($12.7 billion) in government debt on Thursday, more than doubling its target range of 4 billion to 5 billion euros and seeing bond yields fall.
Spain sold 4.27 billion euros in a government bond maturing on July 2015, producing a yield of 3.38 percent. A second bond with a maturity in April 2016 was sold for 2.5 billion euros, with its yield down to 3.75 percent from 4.87 percent at a previous auction.
The sale of an October 2016 bond brought the Treasury 3.2 billion euros, with its yield falling to 3.91 percent from 4.85 percent.
Spain faces big challenges this year as the government has failed to meet its cost-cutting and budget deficit targets last year amid high unemployment and signs of its economy slipping into recession.
A bond auction in Italy on Thursday also brought relief to the Italian government, which sold 12 billion euros in one-year debt instruments, with yields dropping to 2.74 percent from 5.95 percent at a previous auction in December.
Italy is currently on the center stage of the European debt crisis. Some economists worry that the eurozone’s third largest economy might be unable to refinance its huge public debt, which currently stands at 1.9 trillion euros ($2.6 trillion).
With yields on Italian government ten-year securities hovering near the critical level of seven percent, some economists have warned Italy is likely to have to ask the European Central Bank and the International Monetary Fund for bailouts to stave off default on its obligations.
