Financial Times
March 9, 2011
The cost of borrowing for Portugal, Ireland and Greece has hit euro-era highs, amid concern in the market that European leaders will fail to take concerted action to dispel fears of sovereign defaults in the eurozone.
The long-term market interest rate for Spain has come close to setting a record and Italy’s borrowing cost rose above 5 per cent for the first time since November 2008. The moves came as Portugal was forced to pay a sharply higher premium in a debt auction on Wednesday, raising renewed fears that it will be forced to seek an international bail-out.
Ahead of a summit of European Union leaders on Friday and another one later in the month to discuss the response to the eurozone debt crisis, Jim Reid of Deutsche Bank said: “It looks like the authorities aren’t going to do anything particularly aggressive.”
Markets have not delivered a shock like those that caused Greece to seek a bail-out in May and Ireland in November.
“Yes, no one has been paying attention but the situation is more fragile than they think,” said Matt King, head of credit strategy at Citi.
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