Spain pays higher interest rate to raise $6.2 bln

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Associated Press

Posted on February 7, 2013 at 4:03 AM

Updated Thursday, Feb 7 at 4:05 AM

MADRID (AP) — Spain has had to pay higher interest rates to raise €4.6 billion ($6.2 billion) in the first debt auction since a scandal over alleged slush fund payments in the ruling Popular Party broke last week.

The Treasury sold €1.95 billion in two-year bonds at an average rate of 2.82 percent, up from 2.48 percent on Jan. 10. It sold €2.07 billion at a rate of 4.12 percent, up from 3.77 percent on Jan. 17. It placed another €593 million at 5.79 percent, compared with 5.55 percent Jan. 10.

Overall demand was more than double the amount offered.

Spain's borrowing costs have dropped sharply in recent months after European leaders took measures to bolster investor confidence. But recent allegations of corruption have shaken the Spanish government despite its denials of wrongdoing.

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