http://www.telegraph.co.uk/finance/debt-crisis-live/9409803/Debt-crisis-live.html
The up to 100 billion euros, which the euro zone has undertaken to provide to Spanish banks is to do just that, it is only for that purpose and not for any other.
It is time to call a spade a spade. Financing public services with more deficit and more debt will doom us.
Even though the Treasury tried to play it as safe as possible by restricting supply and focusing on shorter-dated bonds, the result of today's auction is very poor. Demand for Spanish paper is collapsing, even for shorter-dated debt which is very worrying and raises the spectre of Spain losing market access. The yield levels, particularly for the 5 and 7-year bonds, are prohibitive and reflect the deep scepticism about the Spanish economy's ability to get out of the rut in which it finds itself.
This government cannot choose between good and bad options, but between bad and worse, which is what we are doing. "If we maintain this common-sense policy, Spain will emerge from the crisis.
11.58 Reuters reports that Spain's five-year borrowing costs hit new euro-era highs at today's auction. The yields on the 2017 bond rose to 6.459pc, up from 6.072pc last time and the most Madrid has paid to borrow at that maturity for 16 years.
11.41 On the Spanish bank bailout, there have been reports this morning that any amount not used for bank recapitalisation out of the up to €100bn could be used to buy public debt.
But, the European Commission has retorted that the amount the eurozone has agreed to lend Spain - which could be up to €100bn - is only for the recapitalisation of the country's banks and not for any other possible use like bond market intervention.
Commission spokesman, Simon O'Connor, said:
The up to 100 billion euros, which the euro zone has undertaken to provide to Spanish banks is to do just that, it is only for that purpose and not for any other.
There is no link between assistance for bank recapitalisation in Spain and any other type of financial assistance, which might be requested at some further juncture by Spain or anybody else.
11.09 As mentioned at 08.45, Spain's parliament is this morning debating the country's austerity measures. Treasury minister Cristobal Montoro (pictured below) did not mince his words when he opened the debate, telling politicians:
It is time to call a spade a spade. Financing public services with more deficit and more debt will doom us.
10.57 While Spain's borrowing costs jumped, France managed to sell debt at lower yields than last time. The country sold a total of €8.96bn of notes maturing between 2015 and 2017. The latter were sold at a yield of 0.86pc, compared to 1.43pc last time.
10.32 Italy's parliament has ratified the European fiscal compact treaty, reports AFP. The pact imposes strict budget displine on its signatories and is due to take effect from January 1 next year if it is ratified by at least 12 EU member states. It was approved with 380 votes in favour and 59 against.
10.15 Commenting on the disappointing Spanish debt auction, Nicholas Spiro of Spiro Sovereign Strategy said "demand for Spanish paper is collapsing":
Even though the Treasury tried to play it as safe as possible by restricting supply and focusing on shorter-dated bonds, the result of today's auction is very poor. Demand for Spanish paper is collapsing, even for shorter-dated debt which is very worrying and raises the spectre of Spain losing market access. The yield levels, particularly for the 5 and 7-year bonds, are prohibitive and reflect the deep scepticism about the Spanish economy's ability to get out of the rut in which it finds itself.
10.02 Spain managed to sell very nearly €3bn of debt - it sold €2.98bn of short- to medium-term government bonds. Borrowing costs jumped and demand also weakened. Investors' bids were worth 2.1 times the amount offered for the five-year paper versus 3.4 times at the last auction, and 2.9 times for the seven-year bond.
09.53 The results from Spain's bond auction are coming through and yields have jumped.
On the 2014 bond, the average yield was 5.204pc compared to 4.335pc last time.
On the 2019 bond, the average yield was 6.701pc, up from 4.832pc last time.
And on the 2017 bond, the average yield was 6.459pc, up from 6.072pc last time.
09.44The flight to safety continues, with Twitter all of a flutter about Belgian and Austrian 10-year bond yields dropping to record lows.
And France too:
09.19 Germany's parliament is interrupting its summer break to vote today on the rescue package for Spain's banks that could be worth up to €100bn.
Angela Merkel is optimistic of securing a broad majority for the aid deal, although bailing out eurozone nations is not popular in prosperous Germany.
Officials argue, however, that stabilising Spain's banking sector is in the country's own interests. Steffen Kampeter, a deputy finance minister, said:
08.45 Also in Spain today, the country's parliament is set to ratify the€65bn budget cuts announced by prime minister Mariano Rajoy last week. Yesterday, Mr Rajoy pledged to forge ahead with the austerity measures, saying:
This government cannot choose between good and bad options, but between bad and worse, which is what we are doing. "If we maintain this common-sense policy, Spain will emerge from the crisis.
But, he is facing mounting opposition to his austerity programme, with Spain's two leading unions, Comisiones Obreras and the General Workers' Union (UGT) calling for a mass rally in Madrid today.
The two unions said they planned more than 80 demonstrations by public sector workers across the country this evening, with the flagship Madrid march due to start around 18.30.
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