Spanish borrowing costs rise in bond auction
BORROWING costs for Spain rose in a bond auction today in the first sale since Standard & Poor’s slashed the country’s credit rating.
The Spanish government raised over €2.5bn in three and five-year bonds, more than the target, but the interest rate was over 4pc.
S&P cut Spain’s debt rating by two notches last month warning that the budget situation had worsened and the state was likely to have to prop up its banks while unemployment rates are stubbornly high.
The European Central Bank has helped to lower yields on fragile euro zone bonds by flooding banks with over €1 trillion in cheap loans but Spain is under increased pressure to rein in its finances.
Spain missed its deficit target by a big margin last year, allowing it to hit 8.5pc of gross domestic product rather than the 6pc agreed with the European Union.