European Crisis Yields Down Significantly-Except In Spain

Here is how the 10-year yields of the worst hit countries in the euro area has fared this year:

Spain: + 0.24 %:points
Italy:   -2.54 %:points
Ireland: -3.90 %:points
Portugal: -5.33 %:points
Greece: -18.83 %:points

Because there was a write down on the existing bonds earlier this year, it is partly misleading to compare the old bonds to the new. Furthermore, as the next table shows, even with the write down, Greek yields are still the by far highest:

Greece: 15.84%
Portugal: 7.44%
Spain:  5.28%
Italy:    4.49%
Ireland: 4.36%

Investors clearly expect even more write downs in the case of Greece, and as a result, it still faces yields that represents an effective cut off from bond markets. Portugal is partly similar to Greece in the sense that it has had a bigger drop in yields than others but still face unbearably high borrowing costs. Spain still has borrowing costs that are below the 6-7% range that is considered the threshold for unacceptably high levels, and they are down from the peaks earlier this year of above 7%, but it is the only country whose yields are above the level 11 months ago.

Italy has yields that can both be viewed as bearable and significantly lower than in the beginning of the year, and Ireland has done even better.