HIGHER RATES: Spain had to pay a sharply higher interest rate in an auction of short-term bonds Tuesday, highlighting growing concerns that the country might eventually need foreign help to finance itself.
THE DETAILS: The Treasury raised €3.39 billion ($4.28 billion) in 12- and 18-month bills, more than its upper target of €3 billion. But it had to offer an interest rate on the 12-month bills of 5.07 percent, up from 2.98 percent at the last such auction on May 14. The rate on the 18-month bills soared to 5.10 percent from 3.3 percent.
THE OUTLOOK: Worries about Spain’s ability to repay its debt grew last week when the country agreed to accept a eurozone loan of up to €100 billion to shore up its ailing banks. The fear is that the country’s financing costs will suffocate the government as it tries to wade its way through a recession and a 24.4 percent jobless rate.
