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Debt woes spread to Italy

11-07-2011 13:59 BJT

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Italy - the euro zone's third-largest economy, is triggering alarm in the financial markets after its sovereign bond yields jumped recently.

Yields on Italy's 10-year bonds rose to more than 6.3 percent during the last trading session, while yields on 2-year bonds also soared.

Analysts say the high yields will make it harder for Italy to access long-term finance, as the government promises to make ends meet by 2013. Last year, Italy's public debt stood at nearly 120 percent of its GDP, second only next to Greece's 130 percent.

Despite the government cutting its deficit this year, the deficit-GDP ratio is still on the rise. Italy had issued 1.9 trillion euros of sovereign debt by the beginning of this year, and the eurozone's risk exposure to Italy is more than 750 billion euros - seven times that of Greece. But more concerning - there's no haircut for Italian debt and banks are not prepared for it. Italian bond holders may have to face with vanishing assets.

 

Editor:Zhang Rui |Source: CNTV.CN

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