Despite brisk demand, the cost for Spain to raise money continued at levels the government cannot pay if it want to cut deficits. According to CNBC, “The yield on the 12-month bill was 2.623 percent, compared with 1.418 percent at the last sale on March 20.” Global capital markets investors must believe that Spain’s current trouble will trigger a near default this year.
A rescue could mean a renegotiation of bond values as happened in the last Greek bailout. There remains a struggle over the possible rescue of Greece. The IMF will try to raise $400 billion, much of which will be set aside to provide for the disintegration of Europe’s finances. On the other hand, Angela Merkel, who holds the purse strings of the region still rejects anything other than austerity as a means to solve the problems of Spain and Italy.