The good news is Greece won't default on March 20, and 10-yearborrowing costs for Spain and Italy have dropped below 5 percent.The bad news is similar-maturity Portuguese bonds still yield morethan 13 percent.

Last week, Greece pushed through the biggest sovereignrestructuring in history, with private holders forgiving more than100 billion euros ($131 billion) of debt, a condition for thenation to win the bailout it needs to repay 14.5 billion euros ofdebt coming due next week.

Unlimited European Central Bank loans to banks have halted abond-market rout that prompted investors to drive German yields torecord lows and yield premiums on the securities of its regionalpeers to euro-era highs. The Italian 10-year yield has dropped morethan 150 basis points and the rate on similar-maturity Spanish debtis about 80 basis points lower since the ECB announced Dec. 8 itwould offer loans to financial institutions through two longer-termrefinancing operations.

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