Spain's borrowing costs rise above 7 percent

The election shock in Athens is reverbarating across the euro zone.

The pain in Spain continues. 

Yields on Spanish government bonds have risen above the troublesome 7 percent mark since Moody's slashed the country's credit rating to near junk status.

Spain's now has the lowest-possible investment grade credit rating, but it may not last. The country's credit rating could be downgraded again in the next three months, Reuters reported.  

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One trader told Reuters he believes the latest ratings cut "increases the chance of a full bailout going forward."

Seven percent is something of a danger zone for government debt. Greece, Ireland and Portugal all sought bailouts after their borrowing costs rose above 7 percent. Spain has so far been able to avoid that fate, relying instead on a $125 billion EU-backed bank bailout plan that has so far failed to ease its financial troubles. 

Still, yields on 10-year Spanish bonds are at the highest level since the euro burst onto the scene in 1999. 

Of course, 7 percent may not be as dangerous as previously thought. 

Italian 10-year bond yields cracked the 7 percent mark in January and have since dropped to around 6.2 percent, CNNMoney said. But Italy's borrowing costs have been rising as Spain's financial position has worsened over the past month.

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