Irish Rescue Plan Shifts Focus to Portugal, Spain: Euro Credit

Ireland’s plan to seek a European rescue risks escalating, rather than alleviating, the sovereign debt crisis as investors turn their focus to the high budget- deficit nations of southern Europe, led by Portugal.

Ireland’s Nov. 21 decision to request emergency aid from the European Union and the International Monetary Fund fueled a surge in Spain and Portugal’s borrowing costs. The extra yield demanded to hold Portuguese 10-year debt rather than German bunds rose 27 basis points today to 434. The Spanish spread with Germany climbed 27 basis points to 236, a euro-era record, after the Treasury sold 3.26 billion euros ($4.4 billion) of bills. That was less than the maximum target.