MADRID — Spain's finance minister insisted again Wednesday that the country does not need a full-blown bailout, even as the country's sky-high borrowing costs remained at dangerous levels.
The interest rate, or yield, on the Spanish benchmark 10-year bond fell nearly 27 basis points to 6.73 percent, below the 7 percent level it has been hovering above since Monday. Such high rates are considered by market-watchers to be unsustainable over the long-term rate and eventually forced Greece, Ireland and Portugal to ask for international financial help.
But Finance Minister Cristobal Montoro told Parliament that Spain won't need the same kind of assistance "because it does not need to be rescued."
After years of insisting its banks were among the healthiest in Europe, Spain recently acknowledged it will need a rescue package to protect the sector from a property boom that went bust in 2008. But investors are now more concerned that the country itself may have to be bailed out and this could seriously test the strength of the entire European Union's finances.
Thousands of Spanish union members protested in Madrid on Wednesday against waves of austerity measures pushed through Parliament over the past five months by the new conservative administration of Prime Minister Mariano Rajoy.
They said his moves to prevent Spain from having to accept a public finance bailout are destroying the eurozone's fourth-largest economy, mired in its second recession in three years with unemployment of nearly 25 percent.
Worries about Spain's ability to repay its debt grew last week when the nation agreed to accept a eurozone loan of up to $125 billion to shore up banks.
The big fear is that, as the money will count as a loan and raise Spain's overall debt load, the country's financing costs will suffocate the government as it tries to wade through a recession and a 24.4 percent jobless rate.