Wednesday, June 27, 2012

Spain cannot afford high rates for long, Rajoy says

Mariano Rajoy

Spanish Prime Minister Mariano Rajoy has said Spain cannot afford to finance itself for long at current rates.

Spanish 10-year government bonds have been trading at yields above 6.8%, coming close to the 7% considered unaffordable.

Mr Rajoy was speaking ahead of the EU summit that begins on Thursday.

"The most urgent subject is the subject of financing," he said. Spain has asked for funding for its banks, but the country has not been bailed out.

Eurozone countries have agreed to lend up to 100bn euros ($125bn; £80bn) to support Spain's banks.

The yield on government bonds trading on the markets is taken as an indication of the interest rates that governments would have to pay to borrow money.

On Tuesday, EU authorities put forward their vision for the future of monetary union, which they hoped would reassure investors that they could safely lend to eurozone countries, and avoid further bailouts being needed.

Mr Rajoy told the Spanish parliament: "There are institutions and also financial entities that cannot access the markets.

"It is happening in Spain, it is happening in Italy and it is happening in other countries," he said.



Source & Image : BBC

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