Bloomberg News

Spanish Yields Drop to Least Since 2010 as Portugal’s Bonds Fall

April 08, 2013

Spanish bonds rose, pushing two-year yields below 2 percent for the first time since 2010, as investors sought the euro area’s higher-yielding government securities, spurred by central bank plans to boost liquidity.

Italian two-year yields slipped to the least in more than two months while Austrian and French borrowing costs fell to records. A report today will show German industrial production increased in February, according to a Bloomberg survey of economists. Portuguese bonds slumped, pushing yields to the most in more than a month, after the Constitutional Court blocked a plan to suspend a monthly salary payment to state workers and pensioners.

“Investors are focusing on return,” said Richard McGuire, a senior fixed-income strategist at Rabobank International in London. “It’s very hard to fight this liquidity rally and we are in uncharted territory because you’ve got record lows and record liquidity.”

The yield on Spain’s 2.75 percent securities maturing March 2015 declined four basis points, or 0.04 percentage point, to 2.02 percent at 8:31 a.m. London time. It dropped earlier today to 1.97 percent, the least since Oct. 26, 2010. The price advanced 0.07 or 70 euro cents per 1,000-euro ($1,300) face amount, to 101.4.

Italy’s two-year rates fell four basis points to 1.46 percent.

France’s 10-year yield fell to a record-low 1.709 percent and Austria’s declined to 1.46 percent.

Spanish bonds handed investors a return of 1.8 percent this month through April 5, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds earned 0.7 percent.

Germany’s 10-year bunds rose one basis point today to 1.22 percent. Portugal’s 10-year yield increased 14 basis points to 6.50 percent.

To contact the reporter on this story: Emma Charlton in London at echarlton1@bloomberg.net; Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net

To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net


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