PAIN IN SPAIN: Spain’s struggling banks and the country’s punishing borrowing costs will be the main subject of discussions at this week’s meetings in Brussels of Europe’s finance ministers.
THE BACGOUND: Representatives from the 17 countries that use the euro are discussing the terms of a €100 billion ($124 billion) lifeline from other members of the 17-country eurozone for Spain’s banking industry. Spain’s borrowing costs on the country’s 10-year bonds hit 7 percent, a level that market-watchers consider is unaffordable and the point at which Greece, Ireland and Portugal all sought an international bailout. Stocks on Madrid’s benchmark share index fell 0.7 percent.
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THE TAKEAWAY: The yield indicates the interest rate a government would have to pay to raise money from financial markets when it holds bond auctions. While Spain can afford the high rates for a few weeks at least, it would find them too expensive in the longer term.
