LONDON: Spanish 10-year government bond yields hit on Monday their highest level since the euro was launched as another regional request for central government aid further spooked markets and reinforced the view Spain will need a sovereign bailout.
Tiny Murcia was on course on Sunday to be the second Spanish region to request help from the central government to keep it afloat, as media reported half a dozen local authorities were ready to follow in the footsteps of Valencia.
Ten-year government bond yields rose as high as 7.55 percent, up 28 basis points on the day. Shorter-dated bonds came under heavier pressure, further flattening the country's bond yield curve.
Five-year yields hit a euro-era high of 7.33 percent, up 47 bps on the day, and two year yields jumped 66 bps to 6.42 percent. The yield spread between 10- and 2-year Spanish bonds was at its narrowest since December 2011.
Italian 10-year government bond yields surpassed their Irish counterparts in intra-day trading for the first time since January 2009. Italian yields were 16 bps higher at 6.37 percent. Ireland is one of the euro zone countries receiving international aid.
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