MADRID - Spain's borrowing costs shot up Tuesday in an auction of short-term debt, in another sign that investors are asking for more when investing in the country's debts.
The Treasury sold euro3.2 billion (US$4.4 billion) in 12- and 18-month bills, short of the euro3.5 billion maximum it had set.
The interest rate on the 1-year bills was 5 per cent, compared to 3.6 per cent in the last such auction on Oct. 18.
For the 18-month debt, the rate was 5.2 per cent, up from 3.8 per cent on that same day.
Spain also saw its bond yields rise sharply on the secondary market in the run-up to a general election this weekend.
The yield on the country's 10-year bond climbed to a perilous 6.25 per cent Tuesday as the eurozone debt crisis rolls on despite changes of government in Italy and Greece. Anything above 7 per cent is considered unsustainable in the long-run.
The Spanish yield Tuesday was up from the previous day's 6.07 per cent.
Tuesday 10-year bond yield was 4.48 percentage points higher than that of the equivalent German benchmark bond, a record high since the euro's creation in 1999.
This Sunday's election is widely-expected to bring the opposition conservatives into power, as voters braving 21.5 percent unemployment and an economy posting zero growth punish the ruling Socialists.
