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Spanish bond rate edges up after IMF report

Tuesday, 9 Oct 2012 | 4:55 AM ET

MADRID -- The interest rate demanded by investors for Spain's benchmark 10-year bonds is edging back up in the wake of the International Monetary Fund's forecast that the Spanish economy will contract by 1.3 percent next year, more than double its previous predictions.

The rate, or yield, climbed by 0.04 percentage points to 5.7 percent in the first hour of trading Tuesday.

The secondary market yield is seen as an indicator of investors' wariness. Rates of around 7 percent are deemed to be unsustainable over the long term and would likely push a country into seeking a full sovereign bailout.

The IMF had previously predicted Spain's economy _ already in double-dip recession _ would shrink by 0. 6 percent in 2013 while the government is banking on a 0.5 percent contraction.