Italian government bonds risk being thrown back into the spotlight of the eurozone debt crisis once Spain decides to request aid and secures central bank support for its debt.
A partial bailout for Madrid would probably trigger the European Central Bank's bond-buying plan, lowering Spain's borrowing costs and increasing investor appetite for riskier assets in general, including debt issued by Italy. The Italian government said this month the economy would contract twice as much in 2012 as previously forecast. Analysts say the bleak growth outlook and an uncertain general election due by April could fuel contagion.
Prime Minister Mario Monti, who enjoys the confidence of investors and European partners but lacks his own political base, gave the clearest indication so far that he is prepared to stay on after the election if there was no clear winner. A renewed loss of confidence in Italy's fiscal position and, if pressure mounts on yields, on its ability to fund itself would be dangerous for the eurozone. Italy is the region's third largest economy and is too big to be rescued.
Full article
© Reuters
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article