Spanish bond yields soar as auction sees weak demand

Spanish borrowing costs soared following a €2.5bn auction on Wednesday, which failed to meet its target.

Investors are becoming increasingly concerned about the heavily indebted nation’s ability to enforce the deepest budget cuts seen in European history. At the end of last month, Madrid announced plans to cut the deficit by €27.3bn by raising the corporate tax rate, implementing a public sector wage freeze and cutting 16.9% off government spending. But the measures have failed to dampen Spain's rise in borrowing costs. At the first government bond auction since the budget cuts were announced, Spain sold a total of €2.59bn, compared to a maximum target of €3.5bn. It auctioned €973m of...