Brussels, 13/01/2011 (Agence Europe) - On Thursday 13 January, Spain and Italy managed to roll over their public debt (treasury bonds). Following Portugal's success in rolling over its debt on Wednesday (see EUROPE 10292), the latest two countries' fund-raising is a sign of a relaxing of tension on the money markets that are still concerned about the debt levels of eurozone countries against the backdrop of low economic growth.
Madrid rolled over nearly €3 billion in five-year gilts at 4.5%, higher than the rate set for a similar operation in November 2010 (3.58%) but lower than the previous day's levels on the market. Rome rolled over €6bn in five- and fifteen-year gilts at 3.67%, lower than Wednesday's rate on the money markets (3.846%).
The European Commission's call on Wednesday for the EFSF to be increased in terms of both funds and scope (a fund set up in the spring of 2010 to help struggling eurozone countries) seems to have calmed nerves on the market. On Thursday, the president of the European Central Bank, Jean-Claude Trichet, made similar comments (see separate article). Another signal that calmed the markets was Japan's news earlier in the week that it would be buying nearly a billion euros-worth of EFSF-issued bonds, following close on the heels of China, which also announced that it was buying sovereign debt in euros.
Increasing the size and scope of the EFSF and the interest rates levied on international financial aid will be on the agenda of the next meeting of the Eurogroup, the eurozone finance ministers' meeting, on Monday 17 January. Increasing the EFSF's borrowing capacity shows the eurozone countries' determination to ensure the stability of the single currency and may also amount to acceptance that other countries will need to call for international aid. (M.B./transl.fl)