Greek bond investors, “scared witless” by the recent surge in yields may use any rally in the securities to sell them, damping their advance, Royal Bank of Scotland Group Plc said.
Italian and Spanish 10-year bonds dropped, pushing yields up to euro-era records versus benchmark German bunds, on concern that slowing growth will hamper efforts to tame the nations’ debt loads.
The European Union would fight any suggestion of debt restructuring by Greece, because it would imply a failure of the bloc’s bailout plan, Royal Bank of Scotland Group Plc said.
History’s first sovereign default came in the 4th century BC, committed by 10 Greek municipalities. There was one creditor: the temple of Delos, Apollo’s mythical birthplace.
Spain’s plan to help cash-strapped regions sell debt risks piling additional liabilities on the central government as borrowing costs approach the level that pushed other nations into bailouts.
Portugal’s biggest opposition party is poised to let the government pass its deepest budget cuts since at least the 1970s, giving a possible boost to the country’s bond market.
Greece’s bonds and credit ratings are factoring in a third bailout for the nation that analysts and investors say will require greater concessions from its international creditors.
Italian 10-year bonds advanced, pushing yields toward the lowest level since 2006, as investors weighed whether the debt market will sustain this year’s rally amid a possible change of prime minister.
European stocks declined as Italian bonds fell after a debt auction and concern grew that budget wrangling in Washington will lead to a government shutdown.
"It's a question of raising the flag to more event risk."
- Harvinder Sian on Sep 09, 2014