Greek, Portuguese bond yields spike to new highs

Yields on Greek and Portuguese government bonds spiked to new highs on Tuesday following the upward revision of the public deficits of the two troubled eurozone members.

The rate of return for investors on two-year Greek bonds rose to 23.237 percent from 22.207 percent at Friday’s close while the yield on 10-year bonds climbed to 15.058 percent from 14.718 percent.

The EU’s statistics agency Eurostat said Tuesday that Greece’s public deficit in 2010 was 10.5 percent of gross domestic product, higher than the 9.4 percent forecast by the government and higher than the 8.1 percent it had been targeting as part of its 110-billion-euro ($160-billion) EU-IMF bailout.

The deficit revision came amid market concerns that Greece will eventually have to restructure its debt, which Eurostat put at nearly 330 billion euros or 142.8 percent of GDP, sent bond yield climbing.

Portuguese sovereigns came under similar pressure, with yields on two-year bonds rising to 11.386 percent from 11.183 percent, while the rate of return on 10-year bonds climbed to 15.058 percent from 14.718 percent.

On Saturday, Portugal’s national statistics agency revised upwards its estimate of the country’s public deficit to 9.1 percent of GDP from 8.6 percent announced earlier.

Earlier this month Lisbon finally threw in the towel and asked the EU and IMF for a bailout that is expected to total 80 billion euros as it scrambles to avoid a possible default in June.