Italy Leads Surge in Sovereign Debt Risk on Berlusconi Concerns

[marmar]

Nov. 7 (Bloomberg) -- Italy led an increase in the cost of insuring European sovereign debt on concern Prime Minister Silvio Berlusconi’s government is collapsing as he faces a parliamentary budget vote tomorrow.

Credit-default swaps on Italy soared 24 basis points to 517 at 10 a.m. in London, approaching the record 534 set Sept. 22, according to CMA. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments rose seven basis points to 330. An increase signals deteriorating perceptions of credit quality.

Italian 10-year borrowing costs surged to a euro-era record as the focus shifted from Greece after Prime Minister George Papandreou agreed to step down to create a new unity government. Investors are betting Berlusconi may be forced to resign if he fails to win majority support in tomorrow’s vote.

“With Greece temporarily off the market agenda, we fully expect Italy to fill that void this week,” said Harpreet Parhar, a strategist at Credit Agricole SA in London. “The turning point required may be for Berlusconi to do the decent thing and step down.” ...........(more)

The complete piece is at: http://www.businessweek.com/news/2011-11-07/italy-leads-surge-in-sovereign-debt-risk-on-berlusconi-concerns.html

[Raven]

1. "Berlusconi to do the decent thing.....???? n/t