Spain’s auction of 3-month and 6-month Treasury bills on Tuesday was a clear indicator that, Greek rescue notwithstanding, the euro zone’s debt troubles are far from over. Demand was lower than at its last regular sale in June, and yields were higher, hitting a punishing level not seen since 2008 for 3-month bills.
According to Reuters, 2.9 billion euros ($4.16 billion) of 3- and 6-month Treasury bills were sold at the auction. Madrid sold 750 million euros in 3-month bills with an average yield of 1.899%, compared with 1.568% at the last auction; the bid-to-cover ratio fell to 6.3, while in June it stood at 9.5. Its 6-month bill sales came in at 2.14 billion euros, on an average yield of 2.519%, the highest it has been since December of 2010. In June it was only 1.776%. Also, demand in June stood at 3.8 compared with this latest activity at only 2.2.
The target had been to sell between 2 billion and 3 billion euros of the two bills.