Spanish Business News

MADRID—Spaniards look poised to elect a new government with a clear mandate for change, at a time when political turmoil in Greece and Italy has brought a sharp escalation of Europe's debt crisis.

Sunday's elections bring the opportunity to shore up confidence in one of the euro zone's most indebted economies after the collapse of governments in Italy and Greece earlier this month spooked investors and sent borrowing costs soaring for even some of the highest-rated members of the common-currency area. Investors are especially concerned about the ability of Italy to repay a debt load of €1.9 trillion ($2.6 trillion), nearly a quarter of all euro-zone debt.

A growing chorus of economists and euro-zone politicians are saying the only way to the stem the crisis is for the European Central Bank to aggressively ramp up its purchases of government debt.

On Thursday, the Spanish Treasury paid a 7% yield to sell a new 10-year government bond, a euro-era high. As it grapples with a burst housing bubble, a 21% unemployment rate and a budget deficit that stood at just over 9% of gross domestic product last year, Spain urgently needs to curb the rise of its financing costs as it completes the remaining 15% of its 2011 bond issuance and ahead of expected 2012 debt issuance of around €150 billion.

Read the full article at Wall Street Journal

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