Spain Sells EU6 Billion of Bills as Yield Fall

July 20 (Bloomberg) -- Spain sold 6 billion euros ($7.8 billion) of treasury bills, the maximum target for the auction, as increased demand pushed down the country’s borrowing costs.

Spain sold 4.25 billion euros of 12-month bills today at an average yield of 2.221 percent, compared with 2.303 percent at the last sale on June 15, as demand was 1.95 times the amount sold. It also sold 1.72 billion euros of 18-month bills at 2.331 percent, compared with 2.837 percent in June. The bid-to-cover ratio was 2.44.

Spain, which has to repay 24.7 billion euros of debt this month, has the third-largest deficit in the euro region and many of its banks are dependent on the European Central Bank for funds. Prime Minister Jose Luis Rodriquez Zapatero, who is pursuing the deepest budget cuts in three decades, is betting on the publication of stress tests on July 23 to bolster confidence in the nation’s lenders.

“Sentiment around Spain has changed a lot over the last few days,” said Gianluca Salford, a fixed-income strategist at JP Morgan Chase Bank in London. “There’s a perception that stress tests will bring clarity.”

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Aug. 17 (Bloomberg) -- Spain sold 5.5 billion euros ($7.1 billion) of treasury bills, the maximum set for the auction, as higher demand lead to a drop in the country’s borrowing costs.

Spain sold 4.34 billion euros of 12-month bills today at an average yield of 1.836 percent, compared with 2.221 percent on July 20, as demand was 2.47 times the amount sold, up from 1.95 last month. It also sold 1.17 billion euros of 18-month bills at 2.078 percent, compared with 2.331 percent last month. The bid- to-cover ratio was 3.86, up from 2.44 in July.

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