Belgium’s 10-Yr Bond Spreads Wider As Political Deal Fails

BRUSSELS (MNI) – Belgian 10-year bond spreads moved wider on Monday
after talks to form a government coalition failed and political
uncertainty increased as one politician speculated a deal is unlikely.

After the talks to form a compromise government failed, Belgium’s
King Albert II asked the main French and Dutch speaking parties for a
fresh round of talks aimed at uniting seven different parties in a
coalition government.

The news raised investor fears and pushed the spread of Belgium’s
10-year bonds 3 basis points wider to +67 basis points over the
benchmark German Bund.

Belgium, which currently holds the rotating presidency of the EU,
has been in the hands of a caretaker government for seven weeks.

In an interview with the newspaper La Derniere Heure, one of the
top francophone politicians, Laurette Onkelinx, warned that a breakup of
the country could be on the cards.

“Let’s hope it doesn’t come to that, because if we split it will be
the weakest who will pay the heaviest price,” Onkelinx said.

“On the other hand, we can no longer ignore that among a large part
of the Flemish population it’s their wish,” she said.

“So yes, we have to get ready for the breakup of Belgium,” Onkelinx
told the paper.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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