A flood of easy money courtesy of the European Central Bank made for a calm start to 2012 but a poor Spanish bond sale last week signals it may only have been a lull before the debt storm breaks, analysts warn.The ECB injected roughly one trillion euros ($1.3 trillion) into eurozone banks at auctions in December and February, helping to ease concerns banks would face a funding crunch.
Some of this cash ended up in the sovereign bond markets, helping reduce the rates countries need to pay to raise funds after a year of high tension over whether Italy and Spain -- the eurozone's third- and fourth-largest economies -- might also need to be bailed out after Greece, Ireland and Portugal.
"The first quarter was exceptional for eurozone state borrowing," said Jean-Francois Robin at France's Natixis bank.
The first three months of the year are important as countries often try to meet a huge chunk of their annual borrowing needs at the outset and they made the most of the early calm.
"Paris and Berlin borrowed at historically very favourable rates and Madrid got a long way towards covering its financing needs this year," noted Robin. Read More
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