The Spanish treasury auctioned sovereign bonds today, Thursday, without major difficulties despite the complicated economic situation in the country in the wake of a possible rescue plan. 

The total sale added up to slightly over €2bn, which was the maximum goal that had been set in advance. Expectations, however, were not put very high, between €1bn and €2bn.

Spain’s economy is in the middle of a deep crisis, with international markets closely observing every move here, as plans for a bailout program are being discussed between the Spanish government and its international partners in the European Union, the International Monetary Fund and the United States.

The fact that such plans seem to be advancing, taking the shape of a 'soft rescue,' according to media report, had a positive effect on the bond sale; the risk premium has dropped from the alarmingly high levels above 500 basis points, where it was situated on Monday.

No big surprises

The action was completed without any big surprises. The benchmark 10-year bonds were sold at an avarage yield of 6.04 percent, compared to 5.74 percent in the previous auction held on April 19, a success given that only four days ago it was up at 6.6 percent.

The yield on 2-year bonds reached an average of 4.34 percent and those that expire in October 2016 reached 5.35 percent.

The demand for benchmark debt was slightly higher than on April 19, 3.29 times the supply for 10-year bonds compared to 2.42 times in April.

The markets reacted quickly. The difference between Spanish and German bonds, which has dropped since the beginning of the week and yesterday fell below 500 basis points, continued down during the early hours Thursday following the auction, and reached 473 basis points, the lowest level since mid-May.

This article was translated and edited by Stina Lunden.