Spain was forced to pay sharply higher interest rates to borrow money in the bond markets on Thursday, paying an annual yield of nearly 7 per cent amid a eurozone sovereign debt crisis that has pushed Greece, Ireland and Portugal into bail-outs and now threatens Italy, write Victor Mallet in Madrid and Richard Milne in London.
The Spanish Treasury issued €3.6bn ($4.8bn) of 10-year bonds at an average yield of 6.975 per cent, the highest level since 1997 and one seen as unsustainable. Only last month, Spain issued 10-year bonds at 5.433 per cent.
In another day of bond market records, the Spanish premium over Germany, a measure of investor perceptions of relative risk, reached 499 basis points. France’s went over 200bp before heavy buying by the European Central Bank eased tensions.