The yield for Spanish 10-year bonds rose to 6.88 per cent Thursday after the ratings agency Moody's downgraded Spain's credit rating to just above speculative grade, according to dpa. On Wednesday, the yield had closed at 6.75 per cent. The rise left the risk premium measuring the difference between Spanish and German bonds at 541 basis points, up from 526 points on Wednesday. Spain's high borrowing costs contributed to the country's decision to seek up to 100 billion euros (126 billion dollars) in European Union aid for its banks. Moody's announced late Wednesday that it was downgrading Spanish government bonds another three notches, citing its intention to borrow money for its banks from European financial stability programmes and its "very limited" financial market access. Moody's dropped the rating from A3 to Baa3, "one notch above speculative grade," the agency said.
