This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/go/rss/int/news/-/news/business-15771776
The article has changed 7 times. There is an RSS feed of changes available.
| Version 5 | Version 6 |
|---|---|
| Spain's borrowing costs hit 14-year high | Spain's borrowing costs hit 14-year high |
| (21 days later) | |
| Spain's borrowing costs have risen at its latest bond auction, as Spaniards prepare to vote for a new government to tackle its financial crisis. | Spain's borrowing costs have risen at its latest bond auction, as Spaniards prepare to vote for a new government to tackle its financial crisis. |
| On money borrowed today, payable in 10 years, Spain has to pay an interest rate of 6.975%, the highest since 1997. | On money borrowed today, payable in 10 years, Spain has to pay an interest rate of 6.975%, the highest since 1997. |
| A high rate or yield indicates investors may not have confidence in a government to fully repay its debts. | A high rate or yield indicates investors may not have confidence in a government to fully repay its debts. |
| The figure is perilously close to 7% - the level at which other eurozone countries have had to seek bailouts. | The figure is perilously close to 7% - the level at which other eurozone countries have had to seek bailouts. |
| The average yield on 10-year Spanish government bonds soared from 5.433% in October. | The average yield on 10-year Spanish government bonds soared from 5.433% in October. |
| Italian 10-year bond yields passed 7% earlier this month. | Italian 10-year bond yields passed 7% earlier this month. |
| Opinion polls indicate that the opposition Popular Party will win Spain's general election on Sunday, ending seven years of Socialist government. | Opinion polls indicate that the opposition Popular Party will win Spain's general election on Sunday, ending seven years of Socialist government. |
| 'Dreadful' result | 'Dreadful' result |
| The Spanish government sold 3.56bn euros (£3.04bn; $4.79bn) worth of bonds out of a maximum target of 4bn euros. | The Spanish government sold 3.56bn euros (£3.04bn; $4.79bn) worth of bonds out of a maximum target of 4bn euros. |
| The auction attracted bids worth 1.5 times the securities offered. The so-called bid-to-cover ratio was down from 1.8 in October. | The auction attracted bids worth 1.5 times the securities offered. The so-called bid-to-cover ratio was down from 1.8 in October. |
| "The result was dreadful. They didn't manage to raise the full amount and the bid-to-cover is really poor," said Achilleas Georgolopoulos, rates strategist at Lloyds in London. | "The result was dreadful. They didn't manage to raise the full amount and the bid-to-cover is really poor," said Achilleas Georgolopoulos, rates strategist at Lloyds in London. |
| "The fiscal profiles of Spain and Italy are different but their yields seem to be aligning now." | "The fiscal profiles of Spain and Italy are different but their yields seem to be aligning now." |
| A similar auction in France saw French short-term borrowing costs - for its two and four-year bonds - also rise by about half a percentage point. | A similar auction in France saw French short-term borrowing costs - for its two and four-year bonds - also rise by about half a percentage point. |
| The government raised 6.98bn euros through the sale, but the interest rate on its four-year bond jumped to 2.82% from 2.31% in October. | The government raised 6.98bn euros through the sale, but the interest rate on its four-year bond jumped to 2.82% from 2.31% in October. |
| The spread between French and German 10-year bond yields widened to more than two percentage points - the widest since the euro was created in 1999 - amid fears that France will be the next eurozone country to face a debt crisis. | The spread between French and German 10-year bond yields widened to more than two percentage points - the widest since the euro was created in 1999 - amid fears that France will be the next eurozone country to face a debt crisis. |
| European share markets were lower after the auctions, with leading share indexes in London, Paris and Frankfurt all down almost 2%. | European share markets were lower after the auctions, with leading share indexes in London, Paris and Frankfurt all down almost 2%. |
| Shares in the banking sector saw big falls, with Lloyds Banking Group down 5.6%, while Barclays, Credit Agricole and Commerzbank all shed about 4%. | Shares in the banking sector saw big falls, with Lloyds Banking Group down 5.6%, while Barclays, Credit Agricole and Commerzbank all shed about 4%. |
| ECB role | ECB role |
| France, whose AAA credit rating has come under threat, has called for the European Central Bank (ECB) to take stronger action. | France, whose AAA credit rating has come under threat, has called for the European Central Bank (ECB) to take stronger action. |
| Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms: AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is minuscule. Glossary in full | |
| Many analysts believe the ECB should buy up large quantities of bonds to try to stem contagion in the eurozone. | Many analysts believe the ECB should buy up large quantities of bonds to try to stem contagion in the eurozone. |
| But Germany has resisted this move, opposing any suggestions for the ECB to become the "lender of last resort", fearing it may lead to rising inflation. | But Germany has resisted this move, opposing any suggestions for the ECB to become the "lender of last resort", fearing it may lead to rising inflation. |
| German Chancellor Angela Merkel reinforced that stance on Thursday. "If politicians think the ECB can solve the euro crisis, then they are mistaken," she said. | German Chancellor Angela Merkel reinforced that stance on Thursday. "If politicians think the ECB can solve the euro crisis, then they are mistaken," she said. |
| Marc Ostwald, analyst at Monument Securities, said the eurozone had to deliver something that was going to calm the markets. | Marc Ostwald, analyst at Monument Securities, said the eurozone had to deliver something that was going to calm the markets. |
| "At the moment, markets feel like they are being given no comfort whatsoever," he said. | "At the moment, markets feel like they are being given no comfort whatsoever," he said. |
| In Italy, new Prime Minister Mario Monti will outline austerity measures later aimed at restoring confidence in the country's economy. | In Italy, new Prime Minister Mario Monti will outline austerity measures later aimed at restoring confidence in the country's economy. |
| He will present his plans to the Italian senate ahead of a confidence vote in the upper house. | He will present his plans to the Italian senate ahead of a confidence vote in the upper house. |
| Meanwhile, a report by the European Commission's taskforce in Greece said that the country had 60bn euros in unpaid taxes - equivalent to 25% of the country's gross domestic product - because of tax avoidance and lack of compliance. | Meanwhile, a report by the European Commission's taskforce in Greece said that the country had 60bn euros in unpaid taxes - equivalent to 25% of the country's gross domestic product - because of tax avoidance and lack of compliance. |