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Rajoy scandal fears hit Spanish bonds


Rajoy scandal fears hit Spanish bonds


The rate of interest the Spanish government is having to offer to get investors to buy its bonds rose sharply on Monday.

A row over slush fund allegations involving Prime Minister Mariano Rajoy and his political party caused bond yields to suffer their biggest one-day percentage jump since last September.

That raised renewed fears Madrid might have to seek an international bailout, something which had looked less likely in recent months.

At the same time the International Monetary Fund said that “risks to Spain’s economy and hence to the financial sector remain elevated.”

The IMF’s monitoring mission did however praised Madrid’s efforts in repairing its broken banking system saying it had made “major progress” in setting up a so-called bad bank to take over the toxic property assets of lenders receiving state aid.

But the monitors did say that bad bank still needs to publish an “updated and comprehensive long-term business plan”.

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