Monti’s Bond Frustrations Mount as Yields Stay High: Euro Credit
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Italian Prime Minister Mario Monti’s frustrations with the bond market are surfacing as spending cuts destroy growth without the reward of cheaper borrowing costs.
Italian gross-domestic product contracted an annual 2.5 percent in the second quarter as Monti sought to appease lenders by trimming the budget and increasing taxes. Even though Monti will bring the deficit within European Union limits this year, Italy still pays 452 basis points more than Germany to borrow for 10 years, within 67 basis points of the gap at market close on the day when Monti took office, Nov. 16.