Credit markets close doors to Spain as banking crisis grows

The Greek stock maket has plummeted 5.9 percent after Standard & Poor's credit rating agency warned that the country has a one-in-three chance of leaving the eurozone. The minister made the remarks on Tuesday, admitting that Spain’s high borrowing costs have shut out bond markets at a time when the country seeks to refinance its debts. "The risk premium says Spain doesn't have the market door open," Montoro says, adding that “as a state we have a problem in accessing markets, when we need to refinance our debt." The interest rate on Spain's 10-year bonds rose to 6.703 percent. Spain plans to raise up to 2 billion euros at a bond auction on Thursday, issuing medium- and long-term bonds. This comes as Prime Minister Mariano Rajoy has voiced concern that Spain cannot continue to finance itself indefinitely, a departure from the previous government line that it could raise the money on its own. Rajoy, in power since December, has implemented more than 30 billion euros of austerity cuts as well as tax increases to reduce the country's deficit and to avoid seeking a financial bailout like Greece, Ireland and Portugal. Spain is estimated to need 50 to 150 billion euros to bailout its entire banking sector, a figure far beyond the 5 billion euros left in the bailout fund the country established in 2009. It is also facing a record eurozone unemployment rate of 24.4 percent.