Spanish Borrowing Costs Soar After Downgrade on 18 Banks

Tuesday, 12 Jun 2012 | 12:51 PM ET

Spain's benchmark borrowing rate rose to its highest since the country joined the euro after Fitch downgraded the credit ratings of 18 domestic banks.

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Spain's 10-year bond yield traded at 6.78 percent on Tuesday, according to data provider FactSet.

Spain agreed last weekend to take a European bailout for its banks but investors are worried it will not solve the country's problem as the government may have trouble paying the money back.

Fitch said in a statement that its downgrade of the banks was a result of a previous downgraded of the Spanish sovereign debt on June 7. Fitch says it had conducted stress tests, both on the Spanish banking sector as a whole and on individual banks, updating results from tests done in 2011.