If country like Italy will encounter difficulties with repaying its debt obligations, it will become a real global issue, with very far-reaching impact, said andrei Zaborski, the investment manager of asset management firm Redgate Capital.<\/p>\n
\u201cItaly has a total debt of 1,6 trillion euros, what is the third largest in the world, after US and Japan,\u201d noticed Zaborski. \u201cItaly\u2019s case is much more difficult as their debt-to-GDP ratio is extremely high \u2013 more than 120% \u2013 coming just after Greece,\u201d he added. In comparison Zaborski brought USA, where the total federal debt is just above 70% of GDP.<\/p>\n
In some extent the rise of bond yields is due to the irrational panic, spreading among the investors, stated Zaborski. \u201cAt the moment we have strong flow of bad news, especially from the USA,\u201d he said, pointing on debt ceiling issue of the States.<\/p>\n
At the same time the situation in Italy and in Spain also gives enough reason to be worried. \u201cThe yields of Spanish bonds spiked up already in the end of last year, as the discussion started around the weak standing of Spanish community banks and their capital requirements,\u201d told Zaborski. \u201cIn July Italian bond yields were also pushed by the budget vote in the parliament \u2013 fortunately the opposition backed government\u2019s austerity plan, but the elevated discussion was enough to bring out the subject globally.\u201d<\/p>\n