Spain paid a euro era record price to sell short-term debt on Tuesday, pushing it closer to becoming the biggest euro zone country to be shut out of credit markets.
The soaring borrowing costs highlight the shortcomings of a June 9 euro zone deal to lend Spain up to 100 billion euros ($126 billion) for its banks. They also illustrate how Europe’s problems run much deeper than Greece, brought back from the brink of default in Sunday’s election.
Spain, the euro zone’s fourth largest economy, had to pay 5.07% to sell 12-month Treasury bills and 5.11% to sell 18-month paper — an increase of about 200 basis points on the last auction for the same maturities a month ago. While Spain’s 10-year bond yields eased slightly to around 7%, the auction underscored the government’s pleas for help from the European Central Bank.