Portugal which has been down the list of near bankrupt nations has just had a bond sale that produced astounding yields. This piece on CNN Money by Ben Rooney tells the story.
Some analyst had the temerity to say that Portugal was not going to default any time soon. At those interest rates, their only way out will be default. And looking from the other side, why would investors buy bonds that pay that kind of yield when all indicators say Portugal will default? Is 21% a good rate when the bond may lose more than 50 percent of its value?
“On Thursday, the yield on 10-year government bonds spiked above 15%, the highest level since the euro currency was launched in 1999, while yields on 3-year notes surged to nearly 21%.”
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