Despite skyrocketing Treasury yields and heavy deficits, the EU has no plan to issue rescue funds to Italy (NYSE:EWI) or Spain (NYSE:EWP), and fully expects the two countries to participate in Greece’s second bailout. Greece will receive €5.8 billion from the euro zone and €2.2 billion from the International Monetary Fund in September.
Both the Italian and Spanish governments have been moving forward with their own rescue efforts to reboot their economies. Spain (NYSE:EWP) recently raised €1.815 billion euros from selling state-owned radio frequencies to wireless network operators in need of more bandwidth. Italy held a debt auction last week to raise funds.
However, credit default swaps continue to surge, in Spain climbing 30 basis points to 420, and climbing 34 points to 367 in Italy (NYSE:EWI) today. Growing concern that Italy and Spain (NYSE:EWP) will not be able to contain their sovereign debt problems has European markets down, and the Markit iTraxx Financial Index, which tracks senior debt of 25 European banks and insurers, increased 5 basis points to 189. The Market iTraxx Crossover Index, which tracks 40 companies with mostly high-yield credit ratings, climbed 8 basis points to 460 today, while the Europe Index of 125 companies with investment-grade ratings gained 2.75 basis points today.