WHILE IRELAND’S auction was the main focal point for many investors yesterday, good demand at Greek and Spanish sales also helped support euro zone peripheral debt markets.
Greece, where euro zone sovereign credit concern originated last year, saw the average yield on the 13-week treasury bills it offered fall to 3.98 per cent from 4.05 per cent in a previous sale in July.
Foreign investors snapped up nearly three-quarters of the €390 million worth of paper that was sold by Greece, which is barely holding on to its investment grade rating from Fitch.
“The yield has fallen below the psychological threshold of 4 per cent and the cover is quite good. But the amount is small and we can’t draw [clear] conclusions,” said Stelios Vizantinopoulos, senior fixed income trader at Marfin Bank.
Although the yield on Spanish 12-month and 18-month treasury bills rose after falling at the two previous placements, markets cheered the issue, which was at the top end of the €6-€7 billion target. Spanish government bond spreads over bunds also narrowed, hitting 172 basis points, its tightest in a week.
“The perception on Spain is changing rapidly, their budget numbers have been shockingly good. They’ve done their [public relations] well and they’re no longer lumped together with all the other peripherals,” said David Keeble from Credite Agricole in New York.
Portugal will be the next to hold a bond auction, and will offer 2014 and 2020 paper today. Portugal’s benchmark spread over German 10-years shrank to 378 basis points yesterday after hitting a euro zone lifetime high on Monday in an indication markets expect another smooth auction. – (Reuters)
