Pressure mounts on European leaders as Spanish borrowing cost hits new high
Spain's borrowing costs Thursday rose to a new high as 10-year bond yields hit the seven per cent level, triggering full international bailouts of other euro zone members and mounting pressure on European leaders to respond to the increasing euro crisis.
The borrowing costs of Spain soared after Moody's Investors Service downgraded the country's bond rating late Wednesday. Moody's cut Spain's rating from A3 to BAA3 and said it could reduce this further within the next three months.
The yield on the 10-year bond has touched the seven per cent mark for the first time in the euro era.
The high borrowing costs threaten the $125 billion bailout Madrid worked out with European officials to rejuvenate its banking sector. The bailout was expected to help calm fears in the financial markets about the strength of Spain's banks and ease the borrowing costs of the nation.
Italy also saw borrowing costs rise, selling bonds repayable in three years with a yield of 5.3 per cent, up from 3.9 per cent.European leaders were however divided on how to deal with the crisis.
Chancellor Angela Merkel of Germany told the German Parliament Thursday that she would resist any outside attempts to force Germany to concede to what she called "simple" and "counterproductive" quick fixes.
"We will only be successful when every, and I stress every, member country of the European Union, the European and international institutions as well as the peoples in our individual countries are ready to recognize the facts and realistically sum up our powers and put them to use for the greater good," Merkel said.
Source: Europe News.Net
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