Italian government borrowing costs soared Wednesday to crisis levels as international investors, spooked by developments in Greece and Spain over the past few days, shied away. Separately, secondary market yields on Spanish 10-year bonds rose to a lofty 6.626 percent. 

In an auction that saw a drop-off in interest from non-Italian bidders, Rome was only able to place €5.73 billion ($7.13 billion) in five- and 10-year bonds, less than the targeted €6.25 billion. The five-year bonds sold at a yield of 5.66 percent, a huge spike from the 4.86 percent yield a similar offering fetched just a month ago.  Even more distressingly, 10-year BTPs priced at 6.03 percent yield, the highest since January, and closer to the 7-percent-yield level widely considered unsustainable.

The price of insuring benchmark Italian five-year bonds also rose, with credit derivative swaps on those issues rising to 519 basis points. Any level over 500 basis points is considered to show a significant lack of confidence by the market in a governments' ability to make good on its debt.