Spain's Borrowing Costs Climb Once Again, Creating Renewed Worries About Spain's Ability To Access The Markets

Thursday, July 19, 2012 07:53
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Spain's Borrowing Costs Climb Once Again, Creating Renewed Worries About Spain's Ability To Access The Markets

Tags: economy | European debt | European zone

The story of Spain’s bond yields seems to seesaw along with every short-term fix the European finance ministers try to implement. Once again, Spain’s borrowing costs have soared and this time, there’s also less demand for the country’s bonds.

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The 10-year bond pushed through the 7% mark on yields and the euro weakened further. This puts even greater pressure on Spain to implement austerity measures to get its debt problem under control.
 
The renewed rise in costs indicate that investors are increasingly wary. This introduces the prospect that Spain will run out of buyers for its debt. That would force Spain to look to the Eurozone countries for bailout funds. Eurozone finance leaders have yet to solidify a plan to manage bailout needs of other countries like Spain and, possibly, Italy.
 
The main focus now becomes on Spain’s ability to access the markets. On another front, France is having no trouble finding buyers for its bonds even though its debt situation is also precarious. In fact, the yield on its five-year bonds hit a new low of .86%.

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