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Spain sells bonds to save economy

01-15-2011 09:15 BJT

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A silver lining may appear in Spain's ailing economy, as the country has succeeded in a bond auction, for the first time this year.

Making its debut of the year on the bond auction Spain sold 3 billion euros of debt to fund the country's deficit.

The successful sale of their five year bond helped cool speculation over the euro zone's most vulnerable debtor countries.

Spain's being eyed as the next country expected to ask for a bailout to help its ailing economy.

But analysts said markets responded positively to the country passing a major financial test.

Francisco Lopez, Analyst at X-Trade Online Traders, said, "I think the markets, as we have, have made a positive interpretation. I think if the way forward is the solvent issue of debt, like we've seen, above all looking at the level of investor demand for Spanish debt, I think we can be content. The valuation is quite positive."

Overseas investors also bought around 60 percent of the bonds offered, with Italy also selling 6 billion euros of its debt.

China said it'll also continue to purchase Spanish bonds.

Despite Spain's initiative to slash the country's deficit, Spaniards lack the government's confidence.

Ana, Madrid Resident, said, "My view is negative, completely negative, because what the government is doing in not right at all."

Victor, Madrid Resident, said, "They are taking us to chaos and crisis."

With the debt crisis rocking the 12 year old single currency bloc the ECB has left its record low interest rate unchanged at 1 percent.

ECB chief Jean-Claude Trichet said nations must do all they can to tackle their deficits.

Jean-Claude Trichet, ECB chief, said, "In view of the ongoing vulnerability to adverse market reactions, countries need to do their utmost to meet their deficit targets and put government debt to GDP ratios firmly on a downward projector."

Steps still need to be taken to soothe the markets and although demand for Spanish bonds was robust, traders said demand from foreign investors wasn't enough to convince them the worst of the crisis is over.

 

 

Editor:Zhang Pengfei |Source: CNTV.CN

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