PIIGS Banks Watching Rising Spanish Bond Yields (STD, BBVA, AIB, IRE, NBG)

Banco Santander, S.A. (NYSE: STD) ADRs are up 0.7% at $11.23, up from under $10.00 at the end of November; and Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) is down 1.3% at $10.60 versus $9.21 about two weeks ago.

Irish banks are mixed.  Allied Irish Banks plc (NYSE: AIB) is down 0.8% at $1.27 versus a recent low of $0.92 and versus a 52-week low of $0.76.  The Bank of Ireland (NYSE: IRE) is up 0.4% at $2.83 compared to $1.44 just about three weeks ago.  Irish banks dealt with news yesterday that many bonuses would not be paid out.

In Greece, the National Bank of Greece SA (NYSE: NBG) is up 1.6% at $1.88 versus $1.72 about three weeks ago and versus a 52-week low of $1.65.

The good news is that Spain can still borrow.  The bad news is that their bond yields have risen just as you have seen here in the U.S.  Another E.U. issue is that Belgian government bonds were weak after Standard & Poor’s cut the outlook on its AA+ credit rating.  ECB President Jean-Claude Trichet has also said that European governments should consider extending more commitments to the Euro-area rescue fund to further fight the fiscal crisis.

Watch these borrowing costs. If that continues to rise too much too fast then there are is going to be a fallout all over again on higher debt servicing costs in the E.U. (and the U.S., too).

JON C. OGG