States are having a hard time to raise the debt they need to bail out their banks. Spain, Belgium and Austria have not been able to sell their debt and have called off the relevant auctions (see FT). Also Finland seemed to have had difficulties (FT). The main question is who will buy the billions of new debt to be issued this and next year and from which countries. Spreads between German bunds and Italian and Greek debt are on a record high. In order for such countries to sell their debt, rates must be very attractive. Corporate issuers will suffer from this increased competition (including state guaranteed bank bonds) of more than EUR 2,600bn.

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