Spain bond demand stays high as economy shrinks in Q4

Spain drew solid demand for its debt yesterday, easily shifting what it wanted to sell at a bond auction, although concerns about Greece’s second bailout and the fragility of some of the eurozone’s riskier economies pushed financing costs higher.

An auction in France also attracted good support, leaving two-year yields below 1%, showing investors continue to favour the stronger north.

Data showed underlining problems in Spain showed its economy — which is facing even more austerity — contracted in the fourth quarter for the first time in two years. By contrast, France earlier in the week reported higher-than-expected growth.