FXstreet.com (Barcelona) - Spanish risk premium exceeded 550 points in the European morning, just ahead of the crucial EU summit. The yield on the country's 10-year bonds rose to 7%, which is considered a psychologically significant level above which debt becomes unsustainable.
The increase in Spanish borrowing costs reflects investors' lack of confidence that EU officials will be able to come up with definite solutions to the debt crisis at the two-day meeting. Direct recapitalization of the distressed Spanish banking sector is one of the points on the summit agenda and until EU's decision on this issue is made known, bond markets will continue pressurizing the country.
The increase in Spanish borrowing costs reflects investors' lack of confidence that EU officials will be able to come up with definite solutions to the debt crisis at the two-day meeting. Direct recapitalization of the distressed Spanish banking sector is one of the points on the summit agenda and until EU's decision on this issue is made known, bond markets will continue pressurizing the country.
