Spain’s bonds slumped, with 10-year yields rising to a euro-era record, after Moody’s Investors Service cut the nation’s credit rating to one step above junk, citing its rising debt burden and weakening economy.
Italy’s 10-year yield reached the highest level in almost five months after its borrowing costs surged at a sale of 4.5 billion euros ($5.65 billion) of three-, seven- and eight-year notes. Spanish 10-year bonds have dropped all four days this week after the nation requested as much as 100 billion euros of aid for its banks last weekend. German bunds gained.
Spanish lenders’ net average borrowings from the European Central Bank rose to a record 287.8 billion euros in May from 263.5 billion euros in April, Bank of Spain data showed today.