Great Graphic: Average Interest Rates on Debt

This Great Graphic comes from Also Sprach Analyst blog.   It depicts the yields of the periphery and Germany in an important way that is often overlooked.  It shows the average yield that the countries are paying on their debt.   Many observers  focus on some part of the curve, which helps make comparative claims and generates relative value trading ideas.   

Yet from the perspective of a country, the average yield on the outstanding government debt is what really matters in terms of debt servicing costs.  The chart also shows that although there is been some divergence in recent years, the lion's share of the convergence that took into the run-up of monetary union has been retained this far.    An important caveat, however, is that a way to achieve lower debt servicing costs is to shorten maturities, that is reduce the average maturity.   The drawback of this is that it forces countries to be more dependent on short-term financing and frequently returning to the market.