Financial Times
July 14, 2011
Pressure mounted on Angela Merkel, the German chancellor, to make a quick decision on how to get private bondholders to pay part of a new €115bn Greek bail-out, with senior Italian officials and the IMF warning that continued uncertainty risked undermining the eurozone.
The calls came as fears that a stalemate could last through the summer forced Rome to pay some of its highest rates on record in order to borrow €3bn ($4.3bn) from the bond market.
Although Thursday’s Italian auction was oversubscribed, rates on a €1.72bn sale of 15-year bonds hit 5.9 per cent – a full percentage point higher than a month ago and near levels where many analysts believe Italy’s debt burden would become unsustainable.
Rating agencies, international lenders and Italian leaders all blamed the market turmoil on the inability of eurozone officials to finalise the Greek deal, which is being held up by German and Dutch demands that Greek bondholders shoulder some of the burden of a rescue.
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