Spain's Troubled Banking System Is Pulling Sovereign Debt Down With It
Sober Look | May 10, 2012 04:19AM ET
Spain's sovereign spreads are at the widest levels since November of last year.
But Italy's widening is not keeping up. The Italy-Spain 5-year spread is now at -34bp - the lowest level since early July of last year.
That means that the periphery spreads are not widening at the same rate. The markets have singled out Spain as the key risk for the eurozone. In particular market participants are becoming increasingly concerned with Spain's banking system (see more on the topic ). With expectations of higher supply of sovereign debt and no real buyers, Spanish spreads continue to widen.
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