News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View more
Guest Commentary: Spain Ahead of the Curve, at least in Bond Auctions

Guest Commentary: Spain Ahead of the Curve, at least in Bond Auctions

Yohay Elam, Forex Crunch,

The euro-zone’s fourth largest economy, Spain, continues distancing itself from the crisis. Yet another bond auction saw lower yields with a full coverage.

As of the beginning of February, Spain has managed to cover nearly 25% of all funding needs. There are 3 reasons for that.

Bonds for 2015, 2016 and 2017 all got lower yields than previous auctions. The 5 year bonds got a yield of 3.565% and an especially high bid-to-cover ratio. The Spanish Tesoro indicated a range of 3.5 to 4.5 billion euros, and it sold 4.55 billion.

This joins previous successful auctions in 2012. One of them saw Spain raise more than double the initial target. All in all, Spain is getting all the money it can, and for reasonable prices.

Spain enjoys the following benefits:

  1. Debt-to-GDP ratio is OK: Spain’s government debt to GDP is around 80%, much lower than Italy’s 120% and around the figures seen for Germany. France has a higher ratio.
  2. LTRO: The ECB’s huge Long Term Repo Operation created an incentive for banks to buy sovereign debt and pledge it as collateral for cheap money from the ECB. The first operation resulted in around 489 billion euros. The second one, due on February 29th, is already pushing banks to accumulate sovereign bonds and enjoy the arbitrage. A total of 1 trillion euros is expected.
  3. A new government: Mariano Rajoy’s government entered office at the end of December. While it “discovered” a much higher deficit for 2011, it showed willingness to comply with the EU demands. The actual performance is still to be seen, but the current grace period certainly allows Spain to raise a lot of money.

The bottom line result: Benchmark 10 year bonds fell under 5%, the lowest since the end of 2010, when the Irish crisis erupted.

Further reading: European Cliff Hanger – Spain

By Yohay Elam, Forex Crunch

Would you like to see more third-party contributors on DailyFX? For questions and comments, please send them to

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.