#IT 10-year bond yields rose to 2.2% today compared to 1.9% a week ago, in light of the possibility of the new coalition government requesting a debt haircut from its international creditors, in accordance ti their leaked draft proposals.
Worth-noting is that several versions of the same document have been leaked so far and thus it appears that the most outrageous of the proposals included therein, are only meant to serve for internal consumption.
That being said, IT banks hold the largest (in EUR terms) NPL portfolio in the Eurozone and the country itself is just too big to fail. IT can under no circumstances become another #GR, as its financing needs would send to other #Eurozone countries a bill that would go through the roof.
IT has also drawn upwards the yields of the other vulnerable economies of southern Eurozone (#GR (#EL), #PT and #ES) with #CY yields appearing surprisingly resistant – another sign of investor confidence following successive positive reviews by the international rating agencies.
On a more qualitative note, and being a citizen of a Eurozone country myself, seeing one of the largest economies of the block and even more so, the one which (along with ES) has benefitted the most from the #ECB’s QA program, even considering the possibility to request debt relief, is unethical and unfortunately provocative from every possible perspective.