The Spanish risk premium advances 5% this Friday, to exceed 124 basis points after the president of the European Central Bank (BCE), Christine Lagardeagitated the sovereign debt of the periphery of the euro zone when understanding the market that did not clarify how it intends to avoid the fragmentation of the bonds.
The interest on the bonds spain e Italia to 10 years are the most affected, while the German declines at the same term, known as the ‘bund’ and which serves as a solvency reference in Europa.
Thus, the country risk of Spain is placed at levels not seen since May 2020 when the uncertainty about the economic recovery due to the coronavirus was maximum and with the 10-year bond above 2.6 percent, maximum of August 2014, while the bund yield falls to 1.4%.
In the Italian case, the risk premium also reaches highs in the most critical moments of the Covid-19, at 250 basis points with the interest on the 10-year bond at 3.6 percent, levels of November 2018 when the The European Commission vetoed the country’s budgets for the second time.
The consensus ensures that the ECB will have to adjust its strategy to limit the risk of fragmentation and thus offer greater clarity on monetary policy in this area.
For the time being, investors have passed judgment and their movements in the bond market show that financing risks in Spain are increasing within a scenario in which the end of the ECB’s asset purchase program must be added.
Thus, Spain plans to place 100,000 million euros in bills and bonds for the second half of the year. It will not have the help of the ECB and will depend exclusively on foreign investors and national banks and forecasts suggest that it will have to pay a higher interest rate, so the cost of the debt will increase, it will damage the Government’s accounts and it will continue to raising the risk premium.
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