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Spanish and Italian benchmark bond yields rose after the auctions, and the premium demanded to hold Spanish debt rather than lower-risk German bonds widened. Investors also focused on possible obstacles to the implementation of the Greek deal, with benchmark interbank lending rates for euros rising amid speculation some bondholders might not participate in the crucial debt exchange. Just days after policymakers toasted a €109bn (£96bn) bailout aimed at hauling Greece back from the brink of insolvency, speculation gathered pace that some of its hapless bondholders might shun a distressed debt exchange. There are also worries that the recent move to boost the powers of the European Union's bailout fund will not be enough to limit contagion and that its size will need to be increased to provide assistance for larger economies. Italian and Spanish bond yields were at levels seen before the Greek second bailout agreement amid renewed worries about contagion to debt-laden countries. The main European debt concern is now whether larger countries like Italy and Spain will get sucked into the mire. Peter Schaffrik, head of European rate strategy at RBC Capital Markets, said: "Over the past couple of days we have had a [re-escalation] of the crisis in the eurozone because the Greek deal isn't seen to be a solution, and at the same time we have the debt ceiling saga in the US. It all contributes to tension." The ratings agency Moody's has already cut Greece's debt rating by three notches to Ca, leaving it just one notch above what is considered default, and has said that the chance of a default is now "virtually 100%". Moody's warned that while last week's bailout package agreed by eurozone leaders would make it easier for Greece to reduce its debt, the country still faced medium-term solvency challenges and that there were significant risks in implementing the required reforms.