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Belgian 10-year bond yields soar after fresh political setback

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  • Belgian 10-year bond yields soar after fresh political setback

BELGIUM - Belgium's rising cost of borrowing breached the 5% mark this week - a 10-year high - after the country's political parties again failed to form a government.

The country has now been without a government for nearly 18 months.

Yesterday, yields on 10-year government bonds fluctuated between 5.11% and 5.56% before falling back slightly to 5.43% today. Earlier this month, yields on Belgian 10-year bonds were 4.37%.

Yields spiked yesterday after Elio Di Rupo, the political leader at the centre of protracted negotiations to form a government, announced his resignation.

Di Rupo initially refused to withdraw his resignation after a four-hour meeting with King Albert II, but he has now requested a "short delay" before deciding on his next move.

The European Commission has called for a new national budget for Belgium, as it wants to see a number of austerity measures put in place.

In June, Belgium's current account balance was approximately €5bn, or just 1.4% of GDP. However, government debt is relatively high, rated by the National Bank of Belgium at 96.1% of GDP in 2010.

The bank has said that a new issue of State notes will take place on 4 December.

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