Possibility of Spanish downgrade looms over euro zone
Spanish government bonds have had a good run since the European Central Bank said it would protect the euro last year. But some analysts say the threat of a rating downgrade to junk remains an important risk.
Credit default swap prices are discounting such a move, according to Markit. Spain is only one notch above junk according to Moody’s and Standard & Poor’s ratings, and two notches above junk for Fitch. All three have it on negative outlook. Bank of America-Merrill Lynch says it sees a “high probability” of a sovereign rating downgrade in the second half of the year.
Junk rating risk casts shadow over Spanish bonds
LONDON (Reuters) – Spain’s borrowing costs will rise if its credit rating is cut as much as market prices imply.
The cost of insuring against a Spanish default suggests investors expect another cut in its sovereign ratings, to junk, according to financial information firm Markit.
Bunds rally as data casts doubt over U.S. recovery
LONDON, May 16 (Reuters) – German Bund futures jumped the
most in six weeks on Thursday as weak data out of the United
States cast doubt over the strength of the recovery in the
world’s largest economy.
U.S. jobless claims rose sharply last week while housing
starts tumbled in April and a gauge of underlying inflation
pointed to weak demand.
Ratings upgrade sends Greek yields near 3-year lows
LONDON, May 15 (Reuters) – Greek 10-year government bond
yields tumbled to their lowest in nearly three years on
Wednesday after Fitch upgraded the country’s sovereign credit
ratings, adding to the upbeat mood in euro zone debt.
The sharp fall in borrowing costs a day after Fitch Ratings
raised Greece to B-minus from CCC on Tuesday
suggested investors were pricing out that possibility, as well
as the risk of another default, analysts said.
Greek bond rebound masks stark economic reality
Ten-year Greek government bond yields tumbled to their lowest in nearly three years one day after Fitch upgraded the country’s sovereign credit ratings.
Borrowing costs fell to 8.21 percent – the lowest since June 2010, just after Greece received a bailout from the International Monetary Fund and European Union. The difference between 10- and 30-year yields was also at its least negative since that time.
Greek yields tumble to lowest in nearly three years
LONDON, May 15 (Reuters) – Ten-year Greek government bond
yields tumbled to their lowest in nearly three years on
Wednesday, one day after Fitch upgraded the country’s sovereign
credit ratings.
Fitch Ratings raised Greece to B-minus from CCC citing a
rebalancing of the economy and progress in eliminating its
fiscal and current account deficits that have reduced its risk
of a euro zone exit.
Italian long yields edge up in anticipation of 30-year sale
LONDON, May 15 (Reuters) – Long-dated Italian government
bond yields crept higher on Wednesday as investors made room for
a new 30-year Italian bond to be sold via syndication.
The announcement of the sale came on Tuesday, when a new
syndicated 10-year Spanish bond attracted huge demand.
Italian yields rise as investors take profit
LONDON, May 13 (Reuters) – Italian bond yields rose on
Monday as investors overlooked a strong debt auction and cashed
in on hefty gains made over the past month but analysts said the
move was a correction rather than a new trend.
Italy sold 8 billion euros ($10.4 billion) of three- and
13-year bonds, with borrowing costs for the short-dated paper at
their lowest since January and demand levels holding firm.
Strong auction lifts Bunds, Portuguese yields drop
LONDON, May 8 (Reuters) – A strong auction of German
five-year bonds and reassurance from the European Central Bank
that it is not a “toothless tiger” lifted Bund futures off
three-week lows on Wednesday.
Portuguese bonds also gained after a strong syndicated
10-year debt sale on Tuesday put it on course to leave its
bailout programme and reinforced appetite for high-yielding euro
zone bonds.
Bunds up on strong sale, data blunts rally
LONDON, May 8 (Reuters) – Bunds rose on Wednesday as an
auction of five-year paper attracted healthy demand after a
recent cheapening in bond prices, but better-than-expected
German data capped the rally.
With European Central Bank President Mario Draghi keeping
the door open for further monetary easing, investors are paying
close attention to data releases to gauge future rate moves – in
particular figures from the euro zone’s largest economy.
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