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Non-Core Euro-Zone Bond Yields Spike On Fresh Worries
LONDON (Dow Jones)--The extra yield demanded by investors to buy bonds issued by highly indebted euro-zone countries instead of safe haven German bonds rose Monday after Spain's ruling party suffered hefty losses in regional elections over the weekend and Italy saw its rating outlook cut to negative by Standard & Poor's.
Concerns that Greece may be forced to restructure its debt also rattled the country's bonds, with moves magnified by wafer thin trading volumes.
The five-year Greek bond yield spiked five basis points to 21.064%, widening the yield spread over similar dated German notes by 12 basis points to 1,872 basis points, according to Tradeweb. The 10-year Greek/German yield spread rose six basis points to 1,342 basis points, a record wide.
The 10-year Spanish bond yield climbed 10 basis points to 5.561%, pushing the yield spread over German bunds to 255 basis points, 13 basis points wider from Friday. The Italian/German yield spread rose 14 basis points to 185 basis points.
Spain is getting back in the market's firing line, having distanced itself from other euro-zone countries with shaky finances earlier this year after making steady progress in paring its deficit.
Spain's Socialist Prime Minister Jose Luis Rodriguez Zapatero said he will continue focusing on his ambitious plans for economic reforms to ensure future economic growth, despite the ruling Socialist party suffering big losses in regional elections.
Rating action on Friday also added to the nervousness.
Fitch Ratings cut Greece's debt rating by three notches to B+ from BB+ on Friday. Standard & Poor's Ratings Services lowered its outlook on Italy because of risks in the government's debt-reduction plan.
LONDON (Dow Jones)--The extra yield demanded by investors to buy bonds issued by highly indebted euro-zone countries instead of safe haven German bonds rose Monday after Spain's ruling party suffered hefty losses in regional elections over the weekend and Italy saw its rating outlook cut to negative by Standard & Poor's.
Concerns that Greece may be forced to restructure its debt also rattled the country's bonds, with moves magnified by wafer thin trading volumes.
The five-year Greek bond yield spiked five basis points to 21.064%, widening the yield spread over similar dated German notes by 12 basis points to 1,872 basis points, according to Tradeweb. The 10-year Greek/German yield spread rose six basis points to 1,342 basis points, a record wide.
The 10-year Spanish bond yield climbed 10 basis points to 5.561%, pushing the yield spread over German bunds to 255 basis points, 13 basis points wider from Friday. The Italian/German yield spread rose 14 basis points to 185 basis points.
Spain is getting back in the market's firing line, having distanced itself from other euro-zone countries with shaky finances earlier this year after making steady progress in paring its deficit.
Spain's Socialist Prime Minister Jose Luis Rodriguez Zapatero said he will continue focusing on his ambitious plans for economic reforms to ensure future economic growth, despite the ruling Socialist party suffering big losses in regional elections.
Rating action on Friday also added to the nervousness.
Fitch Ratings cut Greece's debt rating by three notches to B+ from BB+ on Friday. Standard & Poor's Ratings Services lowered its outlook on Italy because of risks in the government's debt-reduction plan.