Italy’s benchmark 10-year borrowing costs have risen above those of Spain in the secondary market for the first time since March 2012, as the capital markets continue to price in the lingering political uncertainty in Rome.
It’s a sign that, in the short-term at least, the fragile nature of Italy’s governing coalition is being viewed by investors in a similar light to the severe economic problems faced by Spain.
The yield on 10-year Italian paper is currently 4.482 per cent, with Spain’s borrowing costs at 4.465 per cent.
The crossover, the first of its kind since March 2012, comes ahead of a discussion in the Italian senate about barring the former prime minister, Silvio Berlusconi, from his seat, following his conviction for tax fraud.
Such a move could see Mr Berlusconi’s centre-right party withdraw from the governing coalition of Enrico Letta, the prime minister.
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