MADRID — Spain is leading the pack in Europe in making use of the window of opportunity offered by the European Central Bank’s expanded lending to euro zone banks.
On Thursday, the Spanish treasury sold €4.07 billion in bonds, slightly above its target of €4 billion. Although renewed market jitters pushed borrowing costs up a bit, the successful sale means that Spain already has raised about a third of what it had planned to auction for the full year.
As in other euro countries, the Spanish auctions have been buoyed since the start of the year by the E.C.B.’s decision to offer unlimited loans to euro zone banks at the benchmark rate of 1 percent for three years, compared with a previous maximum maturity of one year. The banks signed up for a total of €489 billion, or $636 billion, much of which they have plowed into sovereign debt, where they can make a tidy profit.
Spanish banks received €133 billion of the funds from the E.C.B. in January, representing 37 percent of the total demand from European institutions.
With negotiations over further European funding for Greece set to drag on until at least next week, the Spanish Treasury was forced to offer higher yields on Thursday than at its most recent auctions. The average yield for bonds maturing in July 2015 rose to 3.33 percent, compared with 2.86 percent when such bonds were last sold on Feb. 2.
Speaking in Parliament on Thursday, Luis de Guindos, the Spanish economy minister, pointing to the high demand, with investors bidding for 2.19 times the amount of the three-year bond that was sold, compared with 1.63 times on Feb. 2. That, he said, was “an important sign of confidence in the Spanish economy and the measures being adopted.”
Still, despite eased access to funding, concerns remain about Spain’s public finances and recession-hit economy, along with broader worries about a possible Greek default.
The core Spanish Ibex stock market index was down almost 3 percent in afternoon trading, the worst among major European indices. Stocks were dragged down by concerns about Spanish and other banks after Moody’s Investors Service, the credit rating agency, put their ratings under review. Banking shares also slumped after the Spanish stock market regulator removed a six-month ban on short-selling of financial stocks, which had been imposed to avoid excessive stock market volatility.
Moody’s also late Wednesday downgraded eight Spanish regions, including Catalonia, from Baa2 to Baa3 — only one notch above junk status.
Spain is entering its second recession since the start of the financial crisis, with gross domestic product falling 0.3 percent in the final quarter of 2011 from the previous quarter, according to a report this week from the National Statistics Institute. The Bank of Spain has already forecast a full-year contraction of 1.5 percent.
The new center-right government of Mariano Rajoy has said that it inherited a deficit of about 8 percent of G.D.P. at the end of last year, compared with the 6 percent that the previous Socialist administration had targeted.
The government is set to present its own budget next month, despite recent pressure from European Commission officials to move faster to clarify what additional measures it plans to stick to its target of ending the year with a deficit of 4.4 percent of G.D.P.
