Watch CBSN Live

Investors cool to Spanish debt

(AP) MADRID - Spain paid substantially higher interest rates to auction off euro3 billion ($3.67 billion) in medium-term debt on Thursday amid market worries about the government's ability to right its finances.

The Treasury sold euro2.96 billion ($3.62 billion) in bonds maturing in 2014, 2017 and 2019. Its target range was euro2 billion to euro3 billion. Demand was roughly two times the amount on offer for each issue.

But the interest rate on the five-year debt rose sharply to 6.46 percent, from 5.54 percent at the last such auction on July 5. The Treasury provided no comparable rates for the other maturities.

In the secondary bond market, where issued debt is traded openly, the yield on benchmark Spanish 10-year bonds a measure of investor worries about the solidity of a country's debt was at 6.98 percent Thursday, up 0.06 percentage points on the day.

Eurozone finance ministers are expected to give final approval on Friday for a bailout package of up to euro100 billion for Spain's troubled banks. The banks' bailout was first announced in June, but it has failed to ease worries about Spain's public finances.

The auction came as Parliament debated a package of sales tax hikes and civil servant pay cuts that have triggered daily protests. A nationwide wave of rallies was planned for Thursday evening.

Treasury Minister Cristobal Montoro pulled no punches as he launched the debate. A day after saying "there is no money" to pay civil servant wages because recession and a jobless rate of nearly 25 percent are sapping tax revenue, he said Thursday that Spain simply cannot go deeper into debt.

"It is time to call a spade a spade," he told lawmakers from the podium. "Financing public services with more deficit and more debt will doom us."

The austerity package proposed by the center-right government is designed to save euro65 billion through 2015. It is expected to win passage but without support from any opposition parties.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.