Spain’s risk premium breaks through 500-basis-point barrier

Spain’s risk premium hit a new all-time high early Wednesday bogged down by investor concerns over calls for new elections in Greece as well as the continued doubts about the financial health of Spanish banks.

The risk premium rose to 507 basis points over the German bund after closing Tuesday at 485. The Ibex 35, the Spanish bourse’s main indicator, opened the trading day down by 1.1 percent. By midday the blue-chip index was down 1.24 percent at 6,617.9 points.

Apart from investor alarms, there have been political concerns about the whereabouts of Prime Minister Mariano Rajoy who, until this morning, hadn’t been seen in public over the past two days of market panic and renewed jumpiness over the euro debt crisis.

In Congress for today’s question-and-answer session, Rajoy told reporters that European leaders have no plans to begin bailout discussions for Spain. “No one is talking about that, and I talk to the major European leaders every week,” the prime minister said.

Still, Rajoy admitted that “the situation is very complicated.”

“The risk premium rate has risen significantly which means that it is difficult to finance [debt] but we’re doing what we have to do to ensure that the route Spain takes is the right one.”