Spain's Borrowing Rate Hits High Not Seen Since Country Joined Euro

MADRID -- Spain's key borrowing rate hit a fresh high Thursday not seen since the country joined the euro in 1999, after a credit ratings agency downgraded the country's ability to just above junk status amid rising fears a bank bailout may not be enough to save the country from economic chaos.

The interest rate – or yield – on the country's benchmark 10 years bonds rose to a record 6.96 percent in early trading Thursday, close to the level which many analysts believe is unsustainable in the long term and the rate that forced Greece, Ireland and Portugal to seek bailouts of their public finances.

The ratings agency Moody's downgraded Spain's sovereign debt three notches from A3 to Baa3 Tuesday night, leaving it just one grade above "junk status".

Moody's said the downgrade was due to the offer from eurozone leaders of up to (EURO)100 billion to Spain to prop up its failing banking sector, which the ratings agency believes will add considerably to the government's debt burden.

The lowered score means that even fewer investors will buy Spanish debt, because organizations like pension funds are mandated to avoid assets with such low creditworthiness.

Spain won't immediately collapse if the rate hits 7 percent, but reaching that point would affect Spain next week when it is scheduled to auction debt.

"The clock is definitely ticking," said Michael Hewson, an analyst with CMC Markets.

The bank bailout is intended at recapitalizing the Spanish banking system and calming Europe's debt crisis. Instead, investors seem unnerved by the government taking on extra debt and have pushed Spanish bond yields – a measure of market jitters – higher all week.

Moody's said the Spanish government's ability to raise money on global markets was being hindered by high interest rates, a situation which had led it to accept eurogroup funds to recapitalize debt-burdened banks.

Spanish Bailout: Big Questions Still Remain

While European soccer players were expertly kicking the ball down the field this weekend in the Euro 2012 tournament, European finance ministers were expertly kicking their debt crisis down the road.

Spain's request on Saturday for a 100 billion euro loan (about $125 billion) to recapitalize its banks seems likely to be at least a short-term solution to the worries lately that have gripped European financial markets, raising concerns about a global economic slowdown that could push the United States back into recession.

As the odds of a bank run in Spain have increased in recent weeks, Spanish borrowing costs have soared, while the values of the euro and risky assets such as stocks and commodities have tumbled. Saturday's news could at least temporarily reverse some of those ugly moves.

Even better for Spain, it gets to avoid additional austerity measures as a condition of the loan, as Greece and other bailed-out nations have suffered in the recent past.

But still some big questions linger.

First, will 100 billion euros ultimately be enough? A report by the International Monetary Fund suggests this will be more than enough and that Spanish banks need to raise 60 billion to 80 billion euros to mollify investors and cover losses in Spain's real estate market.

But those losses might continue to grow, which would mean that Spain has to go back to the well again. JPMorgan Chase analysts recently estimated that Spain could need as much as 350 billion euros, the Telegraph reported.

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World's Wealthiest Women: Wealth-X

The richest women may span the globe, but two of them come from the same family: the Waltons.

Two of the Walmart heirs capture spots one and and three on Wealth-X’s list of the world’s richest women. Valued at $29.8 and $28.2 billion respectively, the two women are part of a family that’s worth the same amount as the bottom 30 percent of Americans, according to an analysis from a labor economist at the University of California-Berkeley.

Other super-wealthy women that made Wealth-X’s cut include Australian mining mogul Gina Rinehart, valued at $29.1 billion, and French socialite Liliane Bettencourt, who is valued at $24 billion.

Though she hasn’t made the list yet, Sara Blakely may be poised to crack the rankingsin a few decades. Blakely became the youngest female billionaire this year at 41, thanks to her wildly successful Spanx shapewear businesses.

Here are the world's wealthiest women, according to Wealth-X: 

The World's Wealthiest Women

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