Spanish debt sale raises €2.5bn but fears remain

Spain cleared a hurdle in the capital markets yesterday as it successfully issued new debt at an auction. But analysts continued to warn that Madrid's borrowing costs remain too high to be sustainable. The Spanish government sold €2.5bn of two-year and 10-year bonds in a debt sale. The yield – or interest rate – on the 10-year bonds was 5.7 per cent.

The markets are still concerned about the situation in Spain. A separate analysis by the credit rating agency Fitch showed that sales of repossessed properties in Spain have been recouping only 48 per cent of the value of the original loans, fuelling fears about the potential losses of its financial institutions as the economy sinks into recession.