[QODLink]
Europe
Spain holds successful bond sale
Auction helps treasury raise 2.074bn euros, comfortably beating its own target range of 1.0-2.0bn euros.
Last Modified: 07 Jun 2012 20:43

Spain has held a successful bond sale after a week of speculation that it may need a bailout.

Thursday's auction helped the treasury raise 2.074bn euros in an auction of  two-, four- and 10-year bonds, comfortably beating its own target range of 1.0-2.0bn euros, Bank of Spain figures have shown.

But the funds came at a high cost, with the 10-year bonds fetching more than six per cent - a rate widely regarded as unsustainable for the state over the longer term.

Investors fear Spain will be forced to snatch an international lifeline because it cannot raise the huge sums required to rescue its bad loan-ridden financial sector.

Markets are wary of the unknown cost of bailing out the banks and pessimistic about the state's struggle to rein in public deficits at a time of recession and high unemployment - one in four Spaniards are currently unemployed.

Spanish officials insist however that the country will not have to follow Greece, Ireland and Portugal in asking for aid from the European Union and International Monetary Fund (IMF), which would put Madrid's finances under tight international scrutiny.

An IMF report on Spanish banks to be released on Monday will price their capital needs at 40-80bn euros , Spanish newspaper ABC said Thursday, citing a draft of the document.

The Spanish authorities have given themselves two weeks to take a decision on how to recapitalise weakened banks.

Political union

Spain's successful bond sale came as German Chancellor Angela Merkel called for a political union in the EU to solve the eurozone's debt problems.

After talks on Thursday with David Cameron, UK prime minister, Merkel specified her comments, made in a TV interview, saying that economic policy and public spending should be more broadly aligned among eurozone states.

Follow our comprehensive Euro Crisis spotlight coverage

"We don't just need a monetary union. We also need a so-called fiscal union, that is to say, more budget policy making together," she said on ARD public television.

"We especially need a political union, that is, as time goes on, we must, step by step, give up powers to Europe and grant Europe capacities of supervision."

At a conference of 93 students at her office, held jointly with Cameron and Jens Stoltenberg, Norwegian prime minister, Merkel said eurozone nations must co-ordinate government spending.

"It cannot be that the one [country] runs up a lot of debt and the other earns a surplus every year," she said.

"Long-term it cannot be that the one [country] spends three per cent of GDP on research and the other spends nothing at all on research."

434

Source:
Al Jazeera and agencies
Topics in this article
Country
City
Organisation
Featured on Al Jazeera
Muslim volunteers face questioning and threat of arrest, while aid has been disrupted or blocked, charities say.
Six months on, outrage and sorrow over the mass schoolgirl abduction has disappeared - except for families in Nigeria.
ISIL combatants seeking an 'exit strategy' from Mideast conflict need positive reinforcement back home, analysts say.
European nation hit by a wave of Islamophobia as many young fighters join ISIL in Syria and Iraq.
Featured
Lack of child protection laws means abandoned and orphaned kids rely heavily on the care of strangers.
At least 25 tax collectors have been killed since 2012 in Mogadishu, a city awash in weapons and abject poverty.
Since she was 16-years-old, Scottish Nationalist Party's Sturgeon has strove for independence from the UK.
Armed group's ransom success with German hostages marks a re-emergence, as authorities investigate ISIL links.
Western nations are moving into the resource-rich country after decades of disinterest, challenging China's interests.