Bond spreads are always higher on riskier debt because bond holders are being compensated through yield for future losses that may be incurred in a debt default.
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And if the prices of your old debt are falling then the yields on that debt are rising (bond prices and yields move inversely) and thus you have to pay more for new borrowings: for the new debt is priced compared to the old.
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Worries about default on debt payments by Greece and rising Italian bond yields are the EU debt crisis worries of the moment on this day.
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The misleading, or misguided, bond arrangements probably will not bury the cities in debt or wreak havoc on the municipal bond market.
Yields on government bond debt for nearly all European countries, except German bunds, are rising, as investors sell over fears of eurozone sovereign debt contagion.
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People say, oh, the interest rates went up on bond and in debt in the last couple of days.
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After companies and governments across Asia loaded up on debt this year, pushing bond issuance to a record, most bankers say 2013 will be a bit quieter.
Yet those investors, such as Skandia, a big Swedish insurance company, which sensed impending crisis and refused to buy the government's debt, missed out on a big bond-market rally as deficits and debts were brought under control.
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They are driving up bond prices on Brazilian debt in a never ending search for yield.
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The offering coupon on the bond, which is the yield the government agreed to pay on the debt when it registered the issue with the market, was 4.875% before high demand brought the yield to its lowest ever.
Further, fresh fears about debt auctions in Spain resurfaced when a story in the Wall Street Journal included more details on why a EUR1 billion covered bond issue backed by Spanish regional debt failed to sell last week.
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Fresh developments on the European Union debt crisis scene include higher bond yields Wednesday and some fresh, weak economic data coming from the EU. That has pushed the Euro currency to a fresh 11-month low Wednesday, which has in turn boosted the U.S. dollar index.
Yields on sovereign debt across the Old Continent have picked up on this, with both Italian and Spanish 10-year bond rates rising consistently over the last month to 5.026% and 5.889% respectively on Monday.
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Debt has an obvious cost: the interest rate on a bond or loan.
Bond managers assess debt risk by performing discovery on what is the sustainable gross domestic growth for the country compared to its debt.
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The target was designed to keep big borrowers like Brazil from defaulting on their debt service by budgeting enough money to cover bond interest to foreign investors.
On the European Union debt crisis front, an Italian bond auction was well-subscribed Tuesday, but yields were still at or above the critical 7% level that is deemed in the danger zone for credit default.
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Fresh developments on the European Union debt crisis scene include higher Italian bond yields Wednesday and some fresh, weak economic data coming from the EU. That pushed the Euro currency to a fresh 11-month low Wednesday, which in turn boosted the U.S. dollar index.
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Instead, this week it will deal with anonymous quotes as it tries to raise funds in a Wednesday bond auction amid increasing borrowing costs on its debt.
Germany is scheduled to kick off the euro debt bonanza by auctioning 5 billion euros of its January 2022 bond on Wednesday.
Washington has said repeatedly that in such a case that the debt ceiling was not raised further, it would continue paying interest on bond payments first and foremost.
That is why investors have shunned Greek debt to the extent that the 10 year Greek Government bond closed on May 20th 2011 at a yield of 16.73%, which is a spread of 13.66% or 1366 basis points over German 10 year paper.
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Riding the Asian debt boom, Sinopec's latest bond is the third-largest on record in Asia outside of Japan that was denominated in either dollars, euros or yen, according to data provider Dealogic.
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That would have ramifications for bond spreads, and would raise the insurance costs on corporate debt.
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Other than the safe-haven German bunds, European bond yields were on the rise as fears of an EU debt contagion are again surfacing.
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Thursday, all three ratings agencies cut their ratings on Countrywide's senior debt, citing severe disturbances in the credit and bond markets that have hampered the major mortgage lender's ability to raise funding for its operations.
The biggest gains on U.S. government debt has come from capital gains pops in the bond price, not reinvested coupon payments.
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Spanish and Italian bond yields were lower overnight, on some building optimism the EU debt crisis may at least be stabilizing a bit.
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To this end we invite Greece, private investors and all parties concerned to develop a voluntary bond exchange with a nominal discount of 50% on notional Greek debt held by private investors.
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