Following Hungary’s downgrade today by ratings agency Fitch, concerns over exposure to the country have flared higher.
Reuters’ Scott Barber analysed holdings of the country’s debt, using BIS data from June 2011.
Barber found Austria, the largest holder of Hungarian debt, holds claims to more than $41 billion. Yields on its 10-year bonds have surged above 3.4% today, before settling at 3.397%.
[credit provider=”Scott Barber/Reuters” url=”http://blogs.reuters.com/macroscope/2012/01/06/austro-hungarian-troubles/”]
Yields on Hungarian 10-year bonds have declined slightly since yesterday’s peak above 11%, to 10.07%.
The pressure stems from the passage of a hotly disputed law that could limit the independence of the country’s central bank. Recently a number of bond offerings failed to raise much needed capital.
Interestingly, the close intermingling of the European financial system may prove greater trouble for Italy and Germany, which hold a combined $200 billion in Austrian debt.