STOCK MARKET WATCH -- Tuesday, 26 June 2012

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40. Spain's borrowing rates soar

http://www.irishtimes.com/newspaper/breaking/2012/0626/breaking34.html

Spain's borrowing costs jumped and demand fell at a bill sale a day after Moody's Investors Service downgraded 28 Spanish banks.

The Treasury sold €3.08 billion of bills, beating a maximum target of €3 billion. Three-month bills fetched an average yield of 2.362 per cent, compared with 0.846 per cent at the last auction on May 22, and six-month bills an average rate of 3.237 per cent, compared with 1.737 per cent.

Spain's 10-year borrowing costs rose for a second day, edging toward 7 per cent, after Moody's yesterday cut at least 12 banks' ratings to junk, saying the government's weakening credit profile undermined its ability to backstop lenders.

The downgrades came as Spain negotiates the terms of a €100 billion loan requested for its banks on June 9.