Euro Area

[Kralizec]

Loans/bonds granted under relief packages deserve special treatment because they're granted with the goal of keeping the country afloat and are therefore beneficial to the other creditors. One could draw a paralell with insolvent companies who are put under custody; if the business is kept running in the interim the costs of that operation are given preferential status in the case a bankruptcy does eventually occur (or at least; that's the way it works over here)

Sovereign bonds have traditionally been seen as a safe investment with low returns. France, the Netherlands and especially Germany have recently even sold bonds with negative nominal interest rates - for the plain simple reason that investors in bonds do not generally care about large returns but do care about getting at least their nominal investment back. Spain and Italy's rates are high because bond investors are generally risk averse.

Banks are not the only problems of the Spanish, but also their autonomous regions who they can barely reign in.