Spanish Bonds at Risk as Contagion Gathers Force: Euro Credit
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Spain’s efforts to cut the euro region’s third-biggest deficit may not avert record borrowing costs, as investors speculating on a bailout for Ireland or Portugal trash the bonds of Europe’s peripheral countries.
The extra yield investors demand to hold Spanish 10-year bonds over German bunds jumped as much as 34 basis points this week to 229, nearing June’s euro-era record of 232 basis points. The risk premiums for Ireland and Portugal soared to record highs of 652 and 484 basis points, respectively.