Spain Struggles to Sell Debt as French Yields Fall to Record


19/07/2012 18:26 AST  Bloomberg

Spain’s five-year borrowing costs surged as the government pushed through spending cuts in the face of public protests, while France paid record-low yields of less than 1 percent to sell securities of the same maturity.

Spanish five-year notes yielded an average 6.459 percent at auction today, up from 6.072 percent a month ago. French yields fell to 0.86 percent, almost half last month’s level. Prime Minister Mariano Rajoy, who didn’t turn up to defend his cuts in parliament, secured passage of the plan with 180 votes, indicating none of the opposition in the 350-seat chamber supported it.

The premier, who asked other euro nations for as much as 100 billion euros ($123 billion) last month to bail out banks, is fighting to maintain access to capital markets. Lawmakers in Germany, where borrowing costs have turned negative as investors opt for the safest assets, are set to vote on the Spanish bailout agreement today.

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