Madrid - AFP
Borrowing costs for Spain fell Tuesday when it sold Treasury bills on a market that breathed easier after international lenders reached a deal averting a Greek bankruptcy. Spain\'s Treasury took advantage of the relaxed market to raise 4.09 billion euros ($5.3 billion) in an auction of three- and six-month bills, surpassing its own declared target of 3.0-4.0 billion euros. Compared to the last similar sale on October 23, the rate of return for three-month bills fell to 1.254 percent from 1.415 percent and for six-month bills to 1.669 percent from 2.023 percent. International financial markets strengthened after the eurozone and IMF reached a deal in the early hours of Tuesday, throwing a new lifeline to Greece. Eurozone finance ministers agreed in principle to transfer, in December, 43.7 billion euros ($57 billion) so that the country does not default at around the end of the year. They also adopted a new arrangement with the International Monetary Fund, a party to eurozone bailout packages, to slice more than 40 billion euros by 2020 from the debt owed by Greece. Prime Minister Mariano Rajoy\'s right-leaning government is meanwhile fending off market pressure for Spain to apply for a sovereign bailout from the region\'s European Stability Mechanism. If Spain applied for such a bailout and submitted to strict conditions, it could unlock unlimited bond-buying support from the European Central Bank to lower its borrowing costs. But Spain has already met its 2012 target for sales of medium- and long-term bonds to finance government debt and expenditures, meaning it can almost certainly put off a rescue request until 2013. In fact, Spain has embarked early on next year\'s medium and long-term financing programme. Spain\'s borrowing costs have plunged since mid-summer when the government\'s 10-year bond yield surpassed seven percent. Interest rates remain high, however. Spanish 10-year bonds offered an extra return over safe-haven 10-year German bonds -- a difference popularly known as a risk premium -- of 417 basis in morning trade.