Spreads widening across the board

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Credit Markets Weekly

Italy signalling willingness to compromise Last week the EU Commission declared the debt criterion as not fulfilled by Italy and thus launched an excessive deficit procedure based on the rules of the Fiscal and Stability Pact against the country. In view of Italy's massive breaches of the fiscal pact, this step by the Commission is not unexpected. Even though the Italian government has recently signalled its willingness to compromise, we envisage an ongoing conflict between Italy and the EU, and we expect the markets to remain volatile. According to EU Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici, the Italian budget will also be subject to discussion at the G-20 summit to be held on the weekend in Buenos Aires.