LONDON: Yields on Spanish and Italian bonds fell on Tuesday as relief that Athens had sealed a bailout deal improved risk appetite, but Portugal came under pressure on fears it would be the next in line after Greece.
Euro zone finance ministers sealed a 130-billion-euro ($172 billion) bailout for Greece to avert a chaotic default in March after persuading private bondholders to take greater losses and Athens to commit to deep cuts.
The yield on 10-year Italian debt fell 5 basis points to 5.43 percent, edging to its lowest since early October.
Equivalent Spanish yields also inched lower but traders said much of the news on Greece had already been priced in after growing expectation of deal since late last week.
Yields at the short end of the Portuguese curve rose sharply, up 55 basis points at 13.93 percent, reflecting concerns the country may need to follow Greece in looking for a second bailout.
"Portugal had a bailout on a smaller scale than Greece but people are probably thinking that further down the line Portugal may need further assistance, that it may be the next in line," a trader said. "Maybe that's why it's coming under pressure."