Spain’s risk premium is at its lowest in two years

Since July 2011, Spain’s risk premium is at its lowest. The difference in interest charged on debt was compared with that from Germany and on Tuesday it closed at 268 basis points.

Thanks to the interest on Spanish bonds being stable staying at around 4.4 percent, the day began by staying on the two-year minimum. Germany’s however rose above 1.8 per cent.

In the past year, the risk premium in Spain had reached its high point at 643 by the end of July last year which was when fears came in that the country might have needed a full bailout. This was also when the threat of the existence of the euro came in.

This drop has made a possible buying of debt in the secondary market which could be helped along by debt auctions held around Europe especially in Italy.