France and Spain succeed in bond sales

France and Spain succeed in bond sales

PARIS - Agence France-Presse
France and Spain succeed in bond sales

A bond sale has given Spain’s PM Mariano Rajoy breathing room. AFP photo

France and Spain successfully raised funds at lower rates on the markets despite a raft of eurozone credit downgrades.

In their first bond auctions since Standard & Poor’s downgraded their credit ratings last week, both Paris and Madrid demonstrated they can still borrow at affordable rates.

Despite S&P having dropped Spain’s rating two notches from AA- to A, investors clamored to buy its bonds, with bids exceeding 15.3 billion euros ($20 billion) for the the original 3.5-4.5 billion originally planned to be sold.

Spain raised a combined total 6.609 billion euros in the auction.

The average 10-year bond rate plunged to 5.403 percent from 6.975 percent at a comparable auction last November 17, Bank of Spain figures showed.

Meanwhile, France raised 9.46 billion euros in a sale closely watched as a test of appetite for its debt after S&P’s stripped the country of its top AAA rating. The average yield on benchmark 10-year bonds dropped to 1.07 percent from 2.32 percent in the last comparable sale on November 17, with bids over three times the amount offered.

Standard & Poor,