Germany-Italy bond yield spread widens to record

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The difference between the German and Italian sovereign 10-year bond yields widened on Friday to a record of 4.57 percentage points.

The difference in the cost of borrowing for the two countries widened because money flowed into safe-haven German bonds, pushing down the fixed interest on those bonds, while concern about the state of Italy's public finances sent Italian rates up.

The yield on 10-year Italian debt also rose to a record high point, putting Italy close to levels at which financing its debt mountain is widely considered to be unsustainable.

© 2011 AFP

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