Spain raises $3.8 billion in 1st test since summit

MADRID (AP) - Spain managed to auction €3 billion ($3.8 billion) in medium-term debt Thursday, in the first such sale since EU leaders last week agreed to new measures to help financially weak countries, causing a rally in markets.
Demand was good, helping the Treasury sell at the top end of its range of between €2 billion and €3 billion in the auction of three-, four- and 10-year bonds.
But investors exacted a price - the interest rate on the sale of €747 million in benchmark 10-year bonds rose to 6.43 percent from 6.04 percent at the last such auction on June 7. This was the highest rate since November of last year.
However, the rate on 3-year bonds fell from 5.5 percent to 5.1 percent. The rate on the four-year bonds was 5.54 percent, up from 5.36 percent on June 7.
The summit last week was perceived as a victory for Spain and Italy because euro leaders agreed to allow the permanent bailout fund to recapitalize troubled banks directly, rather than through governments, which would add to their debt burdens.
On the secondary market, Spanish 10-year bonds were trading at 6.49 percent, up 16 basis points for the day.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.