Spain sold 3-month bills at the lowest yield on record at an auction on Tuesday as investors snatch up relatively high-paying instruments in expectation of a European Central Bank rate cut to counteract euro zone recession.
Spain’s borrowing costs have dropped steadily since last summer, when the country seemed to be heading into a financial crisis that could trigger an international rescue, despite a stubborn recession and scarce bank credit for businesses.
The Treasury sold 3 billion euros ($3.9 billion) of 3-month and 9-month paper, at the top end of its target.
The 3-month paper sold 855 million euros at an average yield of 0.120 percent, the lowest since the Treasury introduced the paper in 1991, at a bid-to-cover ratio of 3.8 after 3.3 last month.
The Treasury sold 2.2 billion euros of the 9-month bill, introduced in February, at a yield of 0.787 percent, down from 1.007 percent in March. The paper was 2.4 times subscribed, unchanged from last month.
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