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Debt dynamics: Exploring EU borrowing in changing times

The Sound of Economics

CHAPTER

Why the EU Debt Rating Is Rising Higher Than Others

The difference between, let's say, the German yields and the EU debt has been increasing. The price of swaps is used by financial institutions to guide against interest rate risk. As interest rates rise, we see the price of swaps go up, which means that the yields and the bonds also go up. At the same time, however, we had a secondary countervailing effect, which was that demand for the bonds was extremely high.

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