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BELGIUM’S POLITICAL VACUUM has continued to punish its economy, as a monthly bond auction saw its national debt agency pay its highest interest rate for 11 years.
The agency this morning successfully raised €450m through an auction of 10-year bonds, with demand significantly up on the last similar auction on October 31.
Bloomberg said the agency had been forced to pay a far higher rate than that last auction, however, with investors being given an annual return of 5.659 per cent on their investment – up from a mere 4.372 per cent four weeks ago.
The explosion in Belgium’s bond yield comes only a week after Germany held a 10-year bond auction which met with remarkably poor demand, forcing its central bank to step in and sweep up the remaining bonds on offer.
Italy and Spain have also seen their costs of borrowing rocket to unsustainable levels, with Italy having to pay 7.8 per cent interest on a two-year bond in order to raise €8bn last week.
Italy’s cost of borrowing on a 10-year basis remains above the 7 per cent deemed ‘unsustainable’, while Spain’s rate still hovers around the 6.6 per cent mark.
Belgium’s rate had been close to 5.9 per cent today, earlier, before coming down on news of the successful auction. Belgium’s rate has rocketed in recent days after the man charged with forming a government, Elio Di Rupo, offered to step down after failing to win a breakthrough.
Belgium’s credit rating was downgraded by Standard & Poor’s last Friday as result of the political impasse, which has seen the country without a cabinet for over 18 months.
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Mmm 5.8% with no government, interesting, very interesting,….
Think Italy are due to hold another €8 billion auction tomorrow? Interesting times a head….
Roads and cans come to mind. But when it reaches the end of the cul de sac that’s when another adage comes to mind ventilation equipment and human waste.
I get the impression that the IMF will start to play a much bigger role in all of this, because much less politics involved with them and its in the interest of most countries in the world to contribute to the IMF to save ours and other countries, because if the Euro collapses it will drag down everyone except for mongolia perhaps!
I think the Euro crisis would bring the IMF down. America is in no position to give a marshall plan as they need one themselves. Cant see China footing the bill either.
You could be right, but if they have the money they would be better of lending it to save the economies under strict IMF bailout conditions. This way they keep every thing afloat and earn interest on their cash. If they don’t then All economies will suffer more including China, and I’m guessing they want their current prosperity to continue for a long time yet.
have your say