Indebted states feel increased market heat

“Debt crisis intensifies,” headlines De Standaard. On 18 April, Belgium borrowed 2.95 billion euros at interest rates that at one point in the day reached 4.4%, a two-year record high. “The rate is lower than the one for Greek debt which has shot up” to 20% for 3-year bonds, remarks the daily. The problem is that “the spread between Belgian and German debt has suddenly widened at a time when market sentiment has been characterised by anger and mistrust.” Quoted by the daily, the chief economist at ING explains “for the second time this year, Belgium has auctioned sovereign bonds at a moment of nervousness for the markets,” and remarks that the timing for the issue of 10-year bonds was particularly bad. Belgium has already issued 17.3 billion euros of the 34 billion of linear bonds that it intends to raise this year.

Spain will also have to contend with high interest rates when issuing treasury bills, and El Paísis concerned that "doubts about Greece will punish Spanish debt." According to the Madrid daily, fears of the restructuring of Greek debt "have resulted in more market doubt and once again demonstrated that although Spain is not subject to the same scrutiny as the group of economies that have fallen behind, it could still be subject to turbulent conditions.”