facebook
twitter
rss
account
search
search
 

Spanish debt still hangs over euro

July 19, 2012 at 4:49 PM   |   Comments

| License Photo
MADRID, July 19 (UPI) -- Financial analysts said Thursday Spanish debt remains a threat to the euro and precariously expensive for the government in Madrid.

"The eurozone has managed to maneuver itself into a dead end. The clear solution would be for the European Central Bank to intervene, and if it doesn't I don't see how Spain can get out of this hole," said Lefteris Farmakis, an interest-rate strategist at Nomura International in London.

The New York Times reported Thursday Germany's Parliament approved paying its share of the $122 billion Spanish bank rescue effort agreed to in June by members of the eurozone.

In Italy, Parliament agreed to two critical measures including creation of the European Stability Mechanism, a permanent international funding assistance program, and a measure requiring European governments to control their finances, the Times said.

But borrowing costs for Spain continued to rise. After a $3.6 billion debt auction Thursday, five-year bond yields jumped from 6.072 percent to 6.459 percent. Yields on 10-year bonds briefly topped 7 percent before settling at 6.926 percent.

Italy's 10-year bond yields slid to 5.972 percent, a level analysts call uncomfortably high, especially compared with Germany's rate on comparable bonds, which is 1.215 percent.

"At the moment it is still a game of chicken, of who is going to blink first, the politicians or the ECB?" Farmakis said.

"Demand for Spanish paper is collapsing, even for shorter-dated debt, which is very worrying and raises the specter of Spain losing market access," Nicolas Spiro, managing director of risk assessment firm Spiro Sovereign Strategy, told the Times.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
Most Popular
1
Norways Kongsberg to demo missile for U.S. Navy Norways Kongsberg to demo missile for U.S. Navy
2
E-3 Sentry aircraft tipped for digital cockpit, avionic systems makeover E-3 Sentry aircraft tipped for digital cockpit, avionic systems makeover
3
EBRD: Sanctions hurting Russia EBRD: Sanctions hurting Russia
4
Eni makes major oil find in Ecuador Eni makes major oil find in Ecuador
5
Saab producing vehicle protection system for unidentified customer Saab producing vehicle protection system for unidentified customer
Trending News
Video
x
Feedback