Spain’s 10-year bond yield rose to 6.02 percent today, the highest level since December. That compares with the 7 percent level that pushed Greece, Ireland and Portugal to seek bailouts.
Spain’s 10-year borrowing costs have jumped more than one percentage point since March 2nd, when Spain’s Prime Minister announced that the country will miss the 2012 budget-deficit goal, approved by the European Union.
The regions failure to cut spending, particularly on health care and education, resulted in all the states apart from Madrid missing their deficit target last year. That pushed the national budget-deficit shortfall to 8.5 percent, instead of the 6 percent goal.
To address the surging bond yields, Prime Minister Mariano Rajoy will speak later today in Madrid to explain the necessity of the deepest budget cuts in three decades.
Rajoy increased his efforts since the past week as he seeks to persuade Spaniards to accept spending reductions and tax increases as a less painful alternative to a bailout. His three-month-old government is struggling to convince investors it can reduce the deficit by a third this year and cut down on overspending by regional administrations.
Source: Bloomberg
