Market concern also heightened for fiscal conditions of larger countries such as Italy and Spain, the third and fourth largest economies in terms of GDP in the euro area. Italy faced a tough situation as the yield of Italian government bonds once surged to above 7 percent at around the end of last year.
Thereafter, both in Italy and Spain, due partly to the announcement of fiscal reconstruction measures under new governments, the yield on government bonds has recently declined slightly. There is uncertainty whether the reconstruction measures will be surely implemented, and as massive past-issued government bonds will reach maturity through this spring, whether refunding will be smoothly made is drawing attention.