That gap reflects the interest premium investors demand to hold the riskier Greek debt.
That gap reflects the interest premium investors demand to hold the more risky Greek debt.
Even though Ireland is paying an interest premium, its financing cost, about 3 percent of gross domestic product, is considered manageable.
Corporate borrowers pay an interest premium over the risk-free rate; equities have offered a higher long-term return than government bonds to reflect their higher risk.
The spread is the interest premium that investors demand to compensate for the greater risk of default or interruption of interest payments.
The revival is in part driven by a renewed search for yield by investors disappointed with the poor returns on cash or Treasuries: the interest premium they demand for holding junk has tumbled (see chart 2).The reopening of the junk-bond market has also afforded medium-sized firms access to credit again.
Click here to read part one: WALLACE F. FORBES, president, Forbes Investors Advisory Institute: Mike, you touched on the unusually large interest premium being paid for junk bonds versus government bonds.
After having waited so long, many saw interest rates, premiums or other terms on their policies change for the worse.
As of its next payment on Nov. 6, ING will have repaid €8.5 billion in principal of the €10 billion it received from the Dutch government in 2008, plus an additional €2.8 billion in interest and premiums.
"With this payment we will have paid the Dutch state over €11 billion in principal, interest and premiums and we intend to make our final payments within the next 18 months, resulting in a total annualized overall return for the Dutch state of 12.5 percent," said Ralph Hamers, ING's chief executive.
