Spanish bond yields rise above 6%

Spain’s cost of borrowing has gone above six per cent, increasing bailout prospects, according to the BBC.

The yield on the country’s 10-year bonds hit 6.1 per cent in the build up to debt auctions on Tuesday and Thursday which could become expensive for Spain. The country’s cost of borrowing has risen steadily during the last four months. Investors have voiced concerns about data which reveals Spain’s banks are dependent entirely on emergency loans from the ECB.

The yield suggests that should Spain want to take out a 10-year loan today, it would be given an interest rate of over six per cent. However, the eurozone’s strongest economy, Germany, would only be faced with a 10-year bond yield of 1.73 per cent in comparison.

Spain is enduring a deep economic slump as a result of a bust in its construction and property markets. It had the highest rate of unemployment in Europe, with 4.75 million people out of work. Some 50 per cent of the country’s under-25s are jobless.

Recently the Bank of Spain said that the country’s economy shrank in the opening quarter of the year; however, it did not put a figure on this. In the three months ending 31 December it contracted by 0.3 per cent, so another contraction would see the Spanish economy in recession.