Spain: No Bailout Needed, but Borrowing Costs Soar

Posted July 23rd, 2012 at 9:40 am (UTC-5)
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The debt-ridden Spanish government is denying it will need an international bailout, but its borrowing costs are soaring.

Spanish economic minister Luis de Guindos ruled out the possibility Monday that Madrid would need assistance from its neighbors in the 17-nation euro currency zone.

But the interest rate on Spain's government bonds pushed close to 7.5 percent, well above the 7 percent level at which Greece, Ireland and Portugal all needed financial rescues. The Spanish stock market fell sharply for the second straight day of trading.

De Guindos said financial markets were over-reacting to the financial plight of Spain. But the country is faced with high unemployment, economic contraction and new demands from its autonomous regions for aid from the central government. Europe has agreed to send up to $122 billion to rescue the country's financially stressed banking system.