MADRID: Spain sold 4 billion euros of short-term debt on Tuesday, but yields inched up slightly from a month ago, holding at high levels as the government still holds back from requesting a rescue package.
The average yield on a 3-month bill was 1.203 percent compared with 0.946 percent a month ago, and on a six-month bill it rose to 2.213 percent from 2.026 percent at auction in August.
The Treasury sold 1.4 billion euros of the 3-month bill, and 2.6 billion euros of the 6-month bill, which together were at the top end of its 3 billion to 4 billion euro target.
Spain remains at the centre of investor concerns over the euro zone crisis as it struggles to make tough deficit cuts amid a recession, clean up a distressed banking sector and keep regional governments' spending under control.
The government says it is in no rush to call for a bailout, that some analysts say could be delayed until after regional elections in Prime Minister Mariano Rajoy's homeland Galicia, and the Basque Country on October 21.
Spanish borrowing costs have fallen by around a percentage point over the past month after the European Central Bank unveiled a bond-buying plan aimed at helping to curb soaring financing costs for euro zone periphery countries.
However, an analyst expressed concern over Spain's delay in calling for a bailout, and warned yields could rise further after a positive 'ECB effect' over the past month should ratings agency Moody's take action against Spain when it likely presents its latest review of the country this week.
"The longer Spain prevaricates on the bailout front, the more this effect is likely to be unwound with a Moody's downgrade possible this week and a lack of progress at the Oct. 8 Eurogroup summit set to see this unravelling accelerate," said Richard McGuire at Rabobank.
Domestic banks have continued to back Spain's debt, and that reliance would be reduced if the country call for a rescue package.
Spain has managed to sell 82 percent of its medium and long-term financing needs for the year, but many expect it to call for a bail-out sooner rather than later to help meet large refinancing costs in October.
Yields on Spanish debt rose slightly on Tuesday on reports that Germany's Bundesbank was asking lawyers to verify the legality of the ECB's bond purhcasing scheme.
Both of the bills at Tuesday's auction drew decent demand, though slightly lower than a month ago.
The bid-to-cover ratio was 3.3 on the 3-month bill after 3.4 a month ago, and 1.8 on the longer-dated bill, after 2.2 last time.
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