Portuguese, Greek and Irish bond yields driven even higher
THERE was no let-up in the pummelling of Greek, Irish and Portuguese government bonds in the debt market yesterday. Yields for all three were driven higher for the tenth day in succession.
EU Economic and Monetary Affairs Commissioner Olli Rehn offered some support to Spain in a speech in his native Finland, but debt investors are growing increasingly concerned by the absence of any sign of meaningful support from the ECB to the market, or game changing commentary from political leaders.
The yield on Greek two-year bonds was higher than 25pc at one stage yesterday, the first time yields have ever hit that level. The cost of insuring bonds against default also continues to rise.
"The talk about restructuring or rescheduling of Greek debt is not going away," said Marc Ostwald, a fixed-income strategist at Monument Securities in London.
"As long as no one can offer the market reassurance that there isn't going to be a rescheduling or a restructuring, then the market will keep on pricing in more and more."
Mr Rehn offered some lukewarm support for Greece yesterday. He reiterated his view that there's no plan to allow a Greek restructuring, saying the Greek deficit figure is "high, but on the other hand it is also absolutely true".
He did have some comfort for Spain, though that country is under far less pressure in the markets.
"Spain didn't fall prey to the markets, its yields didn't rise even after Portugal sought aid from the EU. What's been decisive for Spain are the measures it has taken to stabilise its finances and reorganise its banking sector, which is in part quite weak," he said. (Additional reporting Bloomberg)