By David Oakley
Published: May 19 2010 03:00 | Last updated: May 19 2010 03:00
Spain came close to its first debt auction failure yesterday, highlighting the funding problems for weaker eurozone economies.
The government's difficulties in selling €6.44bn ($7.96bn) in one-year and 18-month bills sparked worries over its 10-year debt auction tomorrow.
It planned to issue €8bn yesterday, but only just attracted that amount of bids, with yields at record highs. This prompted debt managers to reduce the size of the sale by €1.56bn. Normally a government bill auction would be covered at least 1.5 times.
Steven Major, head of fixed income at HSBC, said: "The Spanish auction was very disappointing and does not bode well for further issuance. It's becoming more apparent just how difficult it is for Spain, which is a big worry so soon after the launch of the international rescue package.
I'm going home to cry...