Merkel Debt Plan Provokes Selloff Trichet Foresaw: Euro Credit

German Chancellor Angela Merkel is once again provoking a selloff in the bonds of the region’s most indebted nations.

After stalling European Union efforts to rescue Greece in the first four months of this year, Merkel yesterday stepped up her push to make bondholders pay toward any future bailout of a euro nation. Her proposal helped worsen a selloff in the bonds of the bloc’s so-called peripheral nations. The extra yield that investors demand to hold Irish debt over German bunds rose to a record and the spreads on Greek and Portuguese debt widened.