Investing

Spain Borrowing Costs Rise Above 6% on 10-Year Paper

If any more proof is necessary that Spain cannot raise capital at reasonable prices, its new bond auction offers it. The average yield on 10-year notes was 6.044%, up from 5.743% in April.

Spain, which has an economy in recession and unemployment of nearly 25%, desperately needs to bring in capital to support its troubled banks and finance its deficit. The nation has insisted that it does not need outside help. In the past few days, though, it has dropped that position.

A bailout of Spain, the European Union’s fourth-largest economy by gross domestic product, appears to be all but certain. Some economists and the media have claimed Spain is “too big to fail” because of the percentage of the EU GDP it represents and the size of a full-blown bailout.

The news interest rate news shows that Spain has reached the end of its tether.

Douglas A. McIntyre