What happened to the PIIGS (Portugal, Ireland, Italy, Greece, Spain) – they have disappeared from the headlines recently, but there seems to be “life” coming back to bond spreads. Today 10yr spreads to Germany widened in France (+3bps), Italy (+7), Spain and Greece (+14 each).
Credit Default Swaps for several countries and some of their banks also widened noticeably (Italy 157 +10, Ireland 250 +14). With 10yr Greek government bonds still stuck above 10% (10.31%) despite disbursement of the second IMF tranche the question is only when – not if – Greece will declare default.