Spain bond yield rises ahead of finance ministers meeting

spain bond yield rises ahead of finance ministers meeting

In spain, which will be a major topic at the brussel meeting because of the planned aid for credit institutions, the yield on ten-year government bonds rose above the seven percent mark in morning trading for the first time since mid-june. Crossing the threshold is considered critical because refinancing costs then enter a range that is unsustainable in the long term. Meanwhile, italian bonds with the same maturity yielded more than six percent.

While the ten-year yield in spain rose by 15 basis points to 7.02 percent, the effective interest rate on ten-year italian bonds climbed by 14 basis points to 6.14 percent. In the shorter maturities, the increase in yields was about twice as large. For two years, spain currently has to offer almost five percent interest, italy around four percent.

In stark contrast to this is germany, a eurozone country with a strong credit rating, where the yield on two-year government bonds is currently even slightly negative. This means that investors not only come away empty-handed, but actually pay more for their investment. Similar low two-year yields close to the zero line are currently also being seen in the euro countries finland, the netherlands and austria.

European finance ministers meet in brussel at the beginning of the week to discuss details of recent summit decisions. In particular, the planned financial aid to spain’s ailing banking sector is at stake. Most recently, the euro countries finland and the netherlands had caused irritation by casting doubt on important decisions made by heads of state and government.