Risk Premiums on Spanish and Italian National Debt Jump to 420 Point Range

Risk Premiums on Spanish and Italian National Debt Jump to 420 Point Range
El Mundo: La prima de riesgo de España e Italia se dispara hasta el entorno de los 420 puntos
Elena Hita Reporting from Madrid August 5, 2011

Pressure on Spanish and Italian debt has intensified and driven the nations’ risk premiums to new heights. Before European stock exchanges opened, Spanish risk premium was 421 points: that is, annual interest on the country’s 10 year bond is 6.47%, 4.21% higher than Germany’s, according to Thonsom Reuters data.

Italy’s sovereign debt is walking arm in arm with Spain’s: the country’s risk premium is 417 points, and its interest rate 6.42%.

The other investment index, the stock market, is expected to be thumped once again after yesterday‘s bloodletting. The European index which suffered the most yesterday was Paris, which lost about 4%. Germany, London, Italy, and the Eurostoxx lost more than 3%. Paradoxically, the market that suffered the least was Madrid’s at 2%.

The markets are punishing the two Mediterranean countries based on the risk that they will need rescue packages that would be an order of magnitude greater than Greece’s and Portugal’s and also because the European Central Bank is not helping them sustain their economies with debt sales. On Thursday, during an appearance by ECB President Jean Claude Trichet, the markets learned that the ECB had acquired debt from Portugal and Ireland but not Spain or Italy.

Explore posts in the same categories: Business, Politics, Spain, Translations

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