Eurozone's "Problem" Nations Now Cheaper to Borrow Than Germany

Italy and Spain can now borrow money at rates close to those of Europe's strongest economies. This marks a dramatic shift from their past status as risky "periphery" nations. For the first time in 16 years, the premium investors demand to hold Italian and Spanish debt over German bonds has nearly disappeared. This premium, known as the "spread," is a key measure of financial risk. Analysts say investors are rewarding Rome and Madrid for their strict control of budget deficits. Both countries have reduced their government spending gaps more than expected. Meanwhile, the traditional economic powers of France and Germany are facing new pressure. Both have recently announced plans to increase borrowing, which could test investor patience. This narrowing spread signals a major change in the European financial landscape. The old divide between the core and the periphery is fading.