Spain's borrowing rate has risen above the critical level of 7.0 percent ahead of a meeting of eurozone finance ministers in Brussels. The rise means that Spain must pay more interest for its medium-term government bonds traded in stock markets.
On Monday trading, the yield on 10-year bonds increased to 7.026 percent, up from 6.912 percent on Friday.The bond yield increase comes as Spain and Italy are desperately trying to get a grip on their budgets to stay away from an EU bailout. A country with a borrowing rate of above 7.0 percent in eurozone is at risk of needing a debt rescue to escape the effects of its financial crisis. The recent development is alarming for Madrid, as the cash-stripped south European country has already asked for loans to get its troubled banks back on track. Some other cash-stranded European countries, including Greece, Ireland and Portugal, were all forced to seek international aid shortly after their bond yields exceeded the seven percent threshold. Various EU member states have been struggling with a deep economic stagnancy since the bloc’s financial crisis began roughly five years ago, forcing some of the most affected nations to adopt unbearable austerity measures to be eligible to get the EU bailouts. DB/MA