Spanish and Portuguese yields exceed danger-zone figures

Spain’s bond yields surpassed 5% and Portugal’s 7% today, above the rumoured 5% distressed borrowing rate from the EU and the IMF.

The most recent Financial Times figures showed Spain’s 10-year bond yields at 5.2% and Portugal’s at 7.15%.

Spanish and Portuguese yields had previously hovered below 5% and 7%, making a bailout more expensive for Spain than going to the markets.

Both countries’ yields are likely to have to remain at high levels for extended periods to justify an EU or IMF loan. (article continues below)

If it is modelled on Greece’s and Ireland’s bailouts, an intervention in Spain is likely to cost roughly the same as America’s Troubled Asset Relief Programme after the Lehman bankruptcy.

Using the same model, any bailout for Portugal would cost roughly the same as Ireland’s.