Arab Today, arab today spain borrowing costs smash record after downgrade
Last Updated : GMT 13:34:54
Arab Today, arab today
Arab Today, arab today

Spain borrowing costs smash record after downgrade

Arab Today, arab today

Arab Today, arab today Spain borrowing costs smash record after downgrade

Madrid - AFP

Spain\'s borrowing costs shattered euro-era records Thursday after Moody\'s downgraded its debt close to junk-bond status and warned of a growing risk of a full-blown bailout. A weekend deal for eurozone powers to extend a bailout loan of up to 100 billion euros (125 billion) to salvage Spain\'s stricken banks failed stop an intensifying storm on the debt market. Instead, the sheer size of the rescue loan fed fears about its impact on Spain\'s mushrooming sovereign debt and prompted concerns that the state may eventually need rescuing itself. The Spanish crisis is unfolding just three days before Greek elections, further destabilising markets that fear a victory by anti-austerity parties could send Athens back to the drachma. The interest rate on Spanish 10-year government bonds soared to 6.9650 percent, the highest since the birth of the single currency, from 6.721 percent the previous evening. Such high interest rates are regarded by many analysts as impossible for the nation to afford to finance its activities over the longer term, raising the risk of a bigger bailout, just as was the case for Greece, Ireland and neighbour Portugal. Moody Investors Service slashed Spain\'s sovereign debt rating by three notches late Wednesday to Baa3 and left it on review for a possible further downgrade. Since many institutional investors are barred from buying bonds that are rated as junk, or non-investment grade, the prospect of a further downgrade sent a further chill through the market. The difference in the rate between Spanish and safe-haven German 10-year bonds widened to a high of 5.43 percentage points, flirting with last week\'s euro-era record of 5.48 percentage points. \"The risk of losing investment grade pressured the differential this morning and left it at historic highs,\" analysts at Spanish brokerage Renta 4 said in a market report. Spain\'s government insists the eurozone rescue loan, destined to recapitalise bank whose books are heavily exposed to a 2008 property market crash, will be repaid by those lenders who receive the money. But the final responsibility for repaying the eurozone is clearly Spain\'s, Moody\'s said. \"This will further increase the country\'s debt burden, which has risen dramatically since the onset of the financial crisis,\" the agency said in a statement. It predicted Spain\'s public debt, which amounted to 68.5 percent of economic output at the end of 2011, would bulge to 90 percent this year and carry on rising until the middle of the decade. At such high borrowing rates Madrid had limited access to the markets, as demonstrated by the fact that it was forced to seek a rescue loan, the agency said. Further, the country was increasingly dependent on commercial banks, flush with cheap loans provided the European Central Bank, to buy its government bonds, the agency said. \"In Moody\'s view this is an unsustainable situation.\" Unless there were signs of a quick improvement in Spain, such as an exit from recession or rapid progress in cutting the deficit, \"neither of which is likely,\" the agency warned that Spain would be increasingly constrained in refinancing maturing debt. If unchecked, Moody\'s said Spain could lose affordable access to the debt markets and face a rising risk of a full-blown state bailout by the European Financial Stability Facility and/or the new European Stability Mechanism, which comes into force next month. \"Moody\'s action to place the government\'s rating one notch above speculative grade reflects the rating agency\'s view that Spain has moved much closer to needing to seek direct support from the EFSF/ESM, and therefore much closer to being positioned within speculative grade,\" it said. If the Spanish state requires a rescue, investors could be burned, the agency said. \"Moody\'s believes that the debts of euro area sovereigns that are fully dependent upon official sources to fund their borrowing requirements represent speculative-grade risk,\" it said. \"Support would, if needed for a sustained period, be likely to be made conditional on loss-sharing with private investors or in extremis withdrawn altogether.\"

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today spain borrowing costs smash record after downgrade Arab Today, arab today spain borrowing costs smash record after downgrade

 



Arab Today, arab today

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today spain borrowing costs smash record after downgrade Arab Today, arab today spain borrowing costs smash record after downgrade

 



Arab Today, arab today Designer prepared new set of ornaments

GMT 02:45 2017 Wednesday ,28 June

Designer prepared new set of ornaments
Arab Today, arab today France defies terrorism through tourism

GMT 15:18 2017 Saturday ,20 May

France defies terrorism through tourism
Arab Today, arab today Mai Al-Jeddawi presents décor ideas for Ramadan
Arab Today, arab today
Arab Today, arab today

GMT 05:52 2017 Wednesday ,28 June

Suzanne Tamim’s father refuses to give comment

GMT 09:49 2017 Tuesday ,02 May

Girl barred from Malaysia chess competition

GMT 08:48 2017 Saturday ,06 May

Climate science: Bad news gets worse

GMT 16:25 2017 Sunday ,04 June

“Suhoor” is basic meal for fasting

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons

GMT 11:09 2017 Sunday ,25 June

HUAWEI P10 the ‘guru’ of portrait shots

GMT 17:59 2017 Monday ,12 June

Designer Rania Adel reveals her new collection
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday