The amount of interest Spain is having to offer to get investors to buy its short-term government bonds continues to soar.
Madrid’s borrowing costs on loans due to be repaid in a year’s time are now at their highest level since 1997 – before the birth of the euro.
It is paying over five percent leading to fears Spain will soon be forced to ask for international aid.
The yield on the 18-month paper was the highest since November 2011.
The eurozone’s fourth-largest economy has become the focus of the regional debt crisis, with the country struggling to overcome recession and a costly banking sector restructure.
Yields on Spanish 10-year bonds have been trading above 7.0 percent, a level that is seen as unsustainable given Spain’s shaky public finances.
Spain is hoping the ECB will ride to its rescue again. Officials have repeatedly said the central bank needs to take action to stop the euro zone debt crisis from getting worse.
The country sold 2.4 billion euros of the 12-month T-bill at an average yield of 5.074 percent on Tuesday, compared with 2.985 percent at the last auction in May.
It sold 639 million euros of 18-month paper at an average yield of 5.107 percent after 3.302 percent last month.