Italy hit by market fears of contagion from Spain : La Crosse Tribune - LaCrosse News Source
"Italian Premier Mario Monti saw nearly seven months of
confidence-building by his government wiped out by Wednesday, when the
country's borrowing rates in a bond auction skyrocketed back near levels
last seen in December.
A sale of 12-month bonds, a warm-up for Thursday's weightier
longer-term debt auction, demonstrated the speed with which market
jitters spread from Spain following Madrid's weekend concession that its
banks need a bailout.
Italy paid an interest rate of 3.972 percent _ up from 2.34 percent
in a similar auction last month _ to borrow (EURO)6.5 billion ($8.12
billion) in 12-month money from bond markets. Though demand was strong,
the high rate suggests investors worry Italy may eventually need a
rescue of its own.
'Contagion is back with a vengeance, and Italy is bearing the brunt
of the fallout from Spain's request for external assistance," sovereign
debt expert Nicholas Spiro said. Markets, he noted, are no longer
differentiating fiscally-stronger Italy from Spain,'which is a sign that
panic has set in."
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