Wednesday, November 10, 2010

Greece Pays Higher Yields at Auction; Fitch Downgrades in Portugal

Wall Street Journal
November 10, 2010

Greece had to pay a higher yield than a month ago to sell a lower-than-usual amount of 26-week Treasury bills at auction, as investors' nerves over the euro zone's debt-ridden peripheral states kept the market on edge despite local election results Sunday that showed support for the Greek government.

At the more secure end of the euro zone's sovereign-debt spectrum, the Netherlands and Austria paid lower yields to sell bonds Tuesdaythan previously.

This ties in with rising investor appetite for safe paper after Irish and Portuguese yield spreads—the gap between yields on those countries' debt and comparable German securities—hit new highs in the first half of the day. Concerns about Portugal were exacerbated after Fitch Ratings downgraded two Portuguese commercial banks late Monday—Banco Comercial Português SA and Banco Espirito Santo SA—while keeping its negative outlook for both institutions.

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