MADRID — Spain’s borrowing costs soared in a pair of short-term auctions Tuesday as investors worried that the country would not be able to manage an expensive rescue of its ailing banking sector.
The Treasury auctioned $3.9 billion in the two maturities, just above its target range, and demand was strong.
But the cost was very high — an indication that investors are concerned that the Spanish government will be stuck with huge expenses after a European bailout of its fragile banking system.
The interest rate on 3-month bills was 2.36 percent, nearly triple the 0.85 percent paid in the last such auction on May 22. The rate on the 6-month bills was 3.24 percent, nearly twice as much as the 1.7 percent paid in May.
The auction came a day after Spain formally requested financial aid for its banks from its partners in the eurozone. The move was a formality — it had expressed its intent a week early.
Once again, Economy Minister Luis de Guindos did not say how much of the $125 billion lifeline on offer the country planned to use.
While the bailout will help the banks, the government is ultimately responsible for repaying the money. That has raised fears that it will be stuck with huge liabilities, and that’s evident in the country’s borrowing costs.
Addressing a parliamentary commission Tuesday, de Guindos also said no new austerity measures have been set by Brussels as conditions for the loan. That could irk other bailed-out countries that did have string attached to their rescues.
