MADRID, Spain - Spain paid nearly 7 per cent to raise C3.56 billion (US$4.8 billion) in an auction of 10-year bonds Thursday, the highest rate since 1997 and a level seen as unsustainable over the long term.
The rate of 6.97 per cent compared with 5.43 per cent in the last such auction Oct. 20.
Demand was relatively weak. The amount of debt sold came in under the C4 billion maximum target set by the Treasury and the bid to cover ratio was 1.54, compared to 1.76 last time.
After the auction, yields on Spanish 10-year bonds shot up to 6.62 per cent on the secondary market. That was 4.85 percentage points above the yield of the equivalent benchmarket German bund.
Spain's chapter of the European debt crisis has engulfed the campaign for general elections, due Sunday.
Opposition conservatives are expected to score a landslide win over the ruling Socialists, saddled with an economy that has 21.5 unemployment, posted zero growth in the third quarter and is not expected to improve much next year.
Spain is struggling to recover significant economoic growth after enduring nearly two years of recession prompted in part by the collapse of a real estate bubble. It is the periodic focus of fears it will be the next euro zone country to require a bailout, after Greece, Ireland and Portugal.
