Why 3 of Europe's biggest economies are paying a premium for borrowing as bond traders baulk at 'BIF' debt credibility

bond traders are charging britain, italy and france a premium to borrow, dubbing them the 'bifs' — a throwback to the 'piigs' label from the 2011 euro crisis. yields on 10-year uk gilts hit 4.865% on tuesday, france's oat stood at 3.6388%, and italy's bonds yielded 3.7693%. by comparison, us 10-year treasuries yielded 4.2876% and german bunds 2.999%. craig inches at royal london asset management said each country has its own problem. france has a hung parliament after the 2024 election, limiting structural reforms. italy under giorgia meloni has a stable government but very high debt-to-gdp and rising deficits. the uk has the lowest debt-to-gdp in the region but a credibility issue — a large chunk of borrowing goes to debt servicing and welfare, and recent "political shenanigans" worry lenders. the middle east conflict is pushing short-term yields higher on inflation fears, but longer-term yields are also rising. inches said you'd normally expect long-dated yields to fall as markets price in future rate cuts, but that's not happening. the bifs are trying to shorten debt maturities to ease costs, but the premium remains high. if they can't grow or inflate their way out, future supply may need to come at even higher yields.