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Monday, May 28, 2012

Borrowing costs increase for Spain and Italy

by Calculated Risk on 5/28/2012 09:06:00 AM

From the Financial Times: Spain’s borrowing costs near crisis level

Yields on Spain’s 10-year government bonds on Monday moved above 6.50 per cent once again – moving closer to the 7 per cent level that prompted bailouts for Greece, Portugal and Ireland.
Spreads on Spanish 10-year bonds over German Bunds were also flirting with euro-era highs, climbing above 500 basis points.
excerpt with permission
From the WSJ: Bankia Bailout Hits Spanish Bonds
Spanish sovereign bonds came under heavy pressure Monday, pushing yield spreads against German bunds and debt insurance costs to record highs, after the government announced a €19 billion ($23.78 billion) bailout of Bankia SA late Friday.

The effective nationalization of Bankia raised concern the government may be on the hook for further funds to prop up its fragile banking sector.
From Reuters: Yields rise at Italy 2-yr debt sale
Italian two-year borrowing costs rose to their highest since December at a sale of zero-coupon paper on Monday as the prospect of a possible Greek euro exit and Spain's banking woes continued to weigh on the debt of weaker euro zone borrowers.
Here are some links to various European bond yields. The Spanish 10 year yield is at 6.44%, and the Italian 10 year yield is at 5.7%.