Spanish risk premium back above 500 basis points

Date: Monday 28 May 2012

Spain's risk premium has spiked above 500 basis points again due to concerns about the banking sector after the nationalised Bankia requested 19bn euros.

The risk premium approached near 500 basis points on Friday and moved above the threshold to 501 basis points on Monday morning.

Local daily El Mundo reported that the Spanish government will be forced to request aid from the European rescue fund if the risk premium does not fall and inject capital into three other banks (Catalunya Caixa, Novagalicia, and Banco de Valencia).

Japanese broker Nomura speculated this morning that the country will likely need to recapitalise other banks.

The Italian risk premium is at 432 basis points.

SB

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