Forget the debt burdens of Greece or Spain in isolation, the debt situation for the Eurozone as a whole (of which they are part of since they use the euro) isn’t looking too pretty these days either.
Just year to date, Eurozone governments have borrowed a record $175 billion according to the Financial Times.
Says Theodora Zemek, the head of Axa Investment Managers fixed income: “The problem of sovereign risk is just beginning. Countries with high debt levels will have to pay higher and higher yields to issue new bonds.”
Countries within the euro currency system may think that they are independent sovereign nations, but in reality they’re all joined at the hip in one of the most significant ways — monetarily. Thus while the horrendous financial situation of weaker nations such as Greece or Spain is well known, perhaps investors should be keeping an eye on aggregate Eurozone debt as well. Especially since the region will borrow another $38 billion just this week according to Barclays Capital.