NEWS: Spain on the brink as borrowing costs soar to unaffordable levels
Published on Tuesday 10 July 2012 03:21
SPAIN’S borrowing cost rose to dangerously high levels yesterday as finance ministers of the 17 countries that use the euro began to gather in Brussels to discuss terms of a rescue package for the country’s stricken banks.
The interest rate, or yield, on the country’s ten-year bonds rose 16 basis points to 7.03 per cent, a level that market-watchers consider is unaffordable for a country to raise money on the bond markets in the long term and the level at which Greece, Ireland and Portugal all sought an international bailout. Stocks on Madrid’s benchmark index fell 1.5 per cent.
The yield indicates what rate a government would have to pay to raise money from financial markets when it holds bond auctions. While Spain can afford the high rates for a few weeks at least, it would find them too expensive in the longer term.
