Spain and France sold 8.1 billion euros ($10.9 billion) of bonds, sending yields lower across Europe, a day after six central banks jointly moved to reduce financing costs to banks.
Spain sold 3.75 billion euros of notes and had to pay the most since at least 2005 to borrow for five years, with investors ordering more than twice the amount sold. Top-rated France auctioned 4.3 billion euros of debt, including 10-year bonds at 3.18 percent, less than at the Nov. 3 sale.
The debt sales were a test of investor confidence after the Federal Reserve, the European Central Bank and four other central banks in a globally coordinated effort yesterday cut the cost of emergency dollar funding for European banks. The central banks acted after financing costs rose following euro-area leaders’ failure to bolster the region’s rescue fund as planned.
“They were both pretty good auctions,” said Huw Worthington, fixed-income strategist at Barclays Capital in London “The levels are higher than they would like, but the actual auctions were strong. The central bank action yesterday has certainly helped.”
French 10-year yields fell 27 basis points, the most in 20 years, to 3.12 percent after the auction, while Spanish 10-year bond yields declined 21 basis points to 6.015 percent. That compares with a euro-era high of 6.781 percent on Nov. 17, when Spain last auctioned bonds.