Impoverished Spain Bails out Cash-strapped Bankia

Soon after the Spanish government announcing a €19 billion ($23.78 billion) bailout of troubled  Bankia SA, the country's 10-year bond yield rose 0.18 percent point to 6.47%, putting the Spanish sovereign bonds under heavy pressure. The Spanish debt insurance costs have pushed to a fresh records and five year credit default swaps have widened 0.1 percent to 5.57%.

Nationalization of Bankia has darkened the sentiments in the market, as the announcement raised question whether the cash-strapped Spanish government can finance Bankia without international help. Bankia is the third largest lender in Spain, which is currently saddled with...