Record borrowing costs for the Spanish government have prompted consternation to quickly return to markets, who seem to largely have forgotten Greece's election. Joel Flynn reports.
SPAIN-BONDS - The alarm bells in Spain are getting louder.
Tuesday's sale of government debt saw borrowing costs for Spain rise to their highest levels since 1997.
Yields on Spain's one year loans are now 5% -- that's 40% higher than May.
But Soledad Pellon from IG Markets said demand for the debt was the number that should be focussed on.
MARKET STRATEGIST SOLEDAD PELLON, SAYING:
"Things have been very tense in the last few weeks. But the bid to cover ratio was higher than in last auctions and that is positive. There is still appetite for Spanish debt and we were afraid there wasn't."
The 7% price of borrowing over ten years that Spain is currently paying was what forced Portugal, Ireland and Greece to ask for help.
But whilst there are certainly concerns, CMC Markets' Michael Hewson says a Spanish bailout is not yet a certainty.
CMC MARKETS, MICHAEL HEWSON, SAYING:
"Given how long it took them to actually ask for a banking bailout, I certainly wouldn't put it past them to actually have to be dragged kicking and screaming to the table to actually get a sovereign bailout, but I think the measure for that would be if Spanish bond yields hit seven and a half percent."
Another Spanish auction is set for Thursday.
Some have suggested without better leadership from policymakers in Europe, the story will be the same.
Monday's good news from Greece has quickly faded from the market's mind.
Without swift action to help Spain, that could quickly become irrelevant altogether.
Joel Flynn, Reuters