Spanish, Portuguese Debt Underperform Bunds as Crisis Continues
By Paul Dobson - Dec 11, 2010 8:30 AM GMT+0100 Sat Dec 11 07:30:49 GMT 2010
Spanish and Portuguese bonds fell, underperforming benchmark German bunds, as European lawmakers’ divisions on a potential joint security for the area eroded confidence they will be able to end the region’s debt crisis.
Spanish bonds fell all five days last week after officials from Italy, Luxembourg, Belgium and Greece said the proposal for common bonds should be explored, prompting resistance from Germany, France and Austria. German two-year notes slid as U.S. Treasuries slumped amid speculation economic growth may hold up next year, and investors bid for less debt than the maximum on offer at a sale of German 2012 securities.
“The whole diversity of comments regarding ‘E-bonds’ really highlighted how far apart sometimes the high-profile guys think,” said
David Schnautz, a fixed-income strategist at Commerzbank AG in London. “The sell-off in bunds was due to the spillover effects from the Treasuries market.”
The yield on the Spanish 10-year bond rose to 5.42 percent yesterday afternoon in London, up from 5.08 percent on Dec. 3. The 4.85 percent securities maturing in October 2020 fell 2.515, or 25.15 euros per 1,000-euro ($1,322) face amount, to 95.685.
The two-year German note yield increased to 1.08 percent from 0.86 percent, narrowing the difference in yield with 10- year securities to 187 basis points, from 200 basis points on Dec. 3, and as much as 208 basis points on Dec. 7.
European policy makers are grappling to find a solution to the debt crisis that’s already pushed Ireland and Greece this year to seek international bailouts.
EU Summit
Lawmakers are under pressure to take further steps at a Dec. 16-17 summit in Brussels. French President
Nicolas Sarkozy said yesterday that “common bonds would make governments less responsible,” joining German Chancellor Angela Merkel in rejecting the proposal.
Spanish bonds may fall next week amid speculation auctions may underscore rising concern Europe’s debt crisis is deepening.
The nation is due to sell bonds maturing in 2020 and 2025 on Dec. 16.
German bonds handed investors a 6 percent profit this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Spanish bonds handed investors a loss of 4.1 percent and Portuguese securities dropped 6 percent.
(Bloomberg)
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Un'occhiata sugli spread/bund dei periferici, in particolare iberici ...