Businessweek – Italian bonds slumped, driving two- five-, 10- and 30-year yields to euro-era records, after LCH Clearnet SA raised the deposit it demands for trading the nation’s securities.
Two-year note yields rose above 10-year rates, with five- year debt climbing above 7.5 percent as Prime Minister Silvio Berlusconi’s offer to resign left his weakened government struggling to implement austerity measures to reduce borrowing costs. The yield on Italy’s five-year notes jumped 82 basis points, or 0.82 percentage point, to 7.70 percent at 11:56 a.m. London time.
The 7% level was the interest level where Greece, Ireland and Portugal had to get their bailouts.
The gap, or spread, between French and German 10-year bonds reached a record high of 1.47 percentage points. France has proposed a round of reforms recently to prevent it from losing its highest AAA rating.
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