Greece has sworn in a stop-gap government that will lead the country until it heads to the polls for a new general election on June 17. Interim Prime Minister Panagiotis Pikrammenos, a former judge, appointed a group of economists, academics and diplomats to the new caretaker cabinet, after party leaders elected on May 6 failed to form a government.
Greece’s political saga continued to send shockwaves across financial markets and the rest of the eurozone on Thursday, with nervous investors asking a steep price in exchange for buying new Spanish bonds. Though the Madrid’s auction was met with strong demand, yields on 10-year bonds came dangerously close to the levels that forced Greece and Portugal to take bailouts, Bloomberg reports.
“This points to the fact we’re running out of road of debt sustainability for Spain. Ultimately, some form of outside intervention will be necessary,” Richard McGuire, senior fixed-income strategist with Rabobank International in London, told Bloomberg.
Thursday’s auction came after Spanish Prime Minister Mariano Rajoy warned that soaring borrowing costs could shut the country out of international markets. ”Right now there is a serious risk that (investors) will not lend us money or they will do so at an astronomical rate,” Rajoy told parliament recently, as quoted by the CBC. “The spread has risen a great deal, which means it’s very difficult to finance oneself and to do so at a reasonable price.”
Thursday, May 17, 2012