The European Commission is forecasting that the yield of Spanish long-term debt could reach 8% and 6.5% for short-term debt, while the country's risk premium may rise to 650 basis points if Spain fails to tackle its macroeconomic and financial issues, reports El Mundo in its Monday Internet edition, citing a Commission report with worst-case scenario projections.
Yields on Spanish benchmark 10-year bonds Friday climbed above 6.50%, approaching the 7% level that some see as an absolute ceiling for sustainable borrowing costs.
In a "less unfavorable" scenario, the Commission expects that short-term yields could remain at 2% through the end of 2013, and at 6% for long-term debt, the paper adds.
Write to Dow Jones Newswires; enza.tedesco@dowjones.com
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