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Interest Rates Reach New Highs on Greece, Portugal and Ireland Debt

   VOA News  April 21, 2011
   A Portuguese broker follows the Portuguese government's bond auction
   Wednesday, April 20, 2011 in a trading room in Lisbon

Photo: AP

   A Portuguese broker follows the Portuguese government's bond auction
   Wednesday, April 20, 2011 in a trading room in Lisbon

   Interest rates on Greek, Portuguese and Irish debts climbed to new
   records on Thursday as investor fears mounted about the debt-ridden
   governments.
   The interest rate on Greece's 10-year bonds reached nearly 15 percent,
   a record since Europe adopted its common euro currency in 1999. As
   fears mount that Greece will have to restructure the $154 billion
   international bailout it reluctantly accepted last year, investors have
   demanded higher interest rates to account for the added risk of buying
   the securities. Interest rates on two-year Greek notes topped 23
   percent.
   The Athens government has imposed substantial spending cuts and said it
   will sell key state-owned facilities in an effort to cut its deficit
   spending. But the interest rates on its bonds have continued to
   increase even as Greek officials say they have no plans for a debt
   restructuring.
   Portugal is now negotiating terms of its request for a bailout from its
   European neighbors and would become the third country, after Greece and
   Ireland, to accept international assistance. The interest rates on
   Lisbon's bonds have also risen sharply, increasing to more than 9.5
   percent for 10-year notes and more than 11.5 percent on two-year loans,
   both new highs since use of the euro started.
   Meanwhile, the interest rates on Ireland's bonds have also similarly
   increased to new records.
   As interest rates increase on the debts for the governments on the
   geographic periphery of Europe, it has become increasingly expensive
   for them to finance their operations. As the financing costs have
   mounted, the governments have reached the same conclusion that they
   needed outside help.