Germany-France bond yield spread widens to fresh record

16th November 2011, Comments 0 comments

The gap between German and French 10-year borrowing rates, a critical measure of tensions at the heart of the eurozone, widened to a fresh record Wednesday.

In early afternoon trade, the spread increased to 192.6 basis points or 1.926 percentage points, with the French 10-year borrowing rate rising sharply to more than 3.700 percent, meaning that France has to pay about twice as much as Germany to borrow.

Around 1330 GMT, the spread eased slightly to 190 basis points.

The French 10-year bond yield, the return earned by holders, rose to 3.712 percent from 3.683 percent Tuesday, while the equivalent German bond was at 1.814 percent, up from 1.782 percent.

Concerns over the spreading eurozone debt crisis have roiled the markets, with investors preferring to put their money into safehaven German bonds at the expense of other government debt.

The result has been that the borrowing costs for nearly all other eurozone members have risen, in the case of Italy and Spain sharply, taking them to above six and even seven percent which are considered unsustainable for the long-term.

© 2011 AFP

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