Tag Archives: Austria

Austria’s Blumel believes EU covid funding will continue despite a German court | Instant News

LONDON – Austria’s chief financial officer believes there should be no worry over the EU’s recovery fund, with investors increasingly wary of a much-needed post-pandemic cash delay.

The EU agreed in July to leverage financial markets to find 750 billion euros ($ 898 billion) to distribute to 27 countries and shore up their economies after corona virus shock. However, to receive these funds, countries must specify how they will use them – a process that is not yet finished.

In addition, Germany’s constitutional court gave the process a shock. Last month, he raised doubts about it and effectively halted necessary legislative steps in Germany before the funds could be disbursed.

“We have of course followed quite closely the development of court decisions in Germany. To some extent they established what many critics say that there is a danger of implementing temporary measures permanently,” Gernot BlümeI, Austria’s finance minister, told CNBC on Friday.

I am sure that there will be no delay in being able to issue European bonds as well.

Gernot Blume I.

Austrian finance minister

German courts acted after a group called the Citizens’ Willing Alliance complained that the EU agreement did not allow the bloc to take on collective debt. The German judge said that the federal government must ensure that borrowing at the EU level “does not become a permanent solution” – a view shared by Austria.

“I can understand what the German court is saying and I agree to some extent,” he said, adding that Austria was “a little more skeptical about permanent debt mutualization within the European Union” than France and Germany. .

“That’s not what the Union was designed for. And we have now taken crisis countermeasures. But by definition (its) crisis is a temporary situation, so the actions we are taking to counter this crisis also have temporary motives,” BlümeI told CNBC “Squawk Box. Europe “Friday.

There is another element that is required before funds can be disbursed: All EU member states need to complete the ratification process in their national parliaments. Austria is one of the 10 EU countries that has not done that and without this, the EU cannot take advantage of the debt market.

“I am sure there will be no delay in being able to issue European bonds as well as this is an important step towards boosting the European economy again,” Austria’s chief financial officer said when asked why his country had not taken this step.

“We have agreed to the measures, Austria paid most of the 12 billion euros into this pot and we are doing this because we think this is the right way to increase growth in the European market because all European citizens will benefit from it,” he added. .

There’s nothing wrong with negotiating a vaccine with Russia

Austria, like other EU countries, has struggled to quickly roll out a Covid-19 vaccine to its citizens.

But Chancellor Sebastian Kurz confirmed last weekend that negotiations to buy Russia’s Sputnik V vaccine were complete, although this injection has not yet been approved by the European Medicines Agency.

BlümeI said Austria was following the rules and “trying to get more doses for vaccinations, only to be faster in restoring the economy and restoring their freedom.”

“I don’t see anything wrong in doing it,” he said.

Some eastern EU countries, such as Hungary, have decided to go beyond the deals negotiated by the European Commission to buy more vaccines themselves, even if these have not received block-wide medical approval.

Speaking to CNBC, BlümeI said he was optimistic that in the next two to three months, Austria would vaccinate all adult populations wishing to receive the vaccine.

A man sits on a park bench in the Volksgarten in front of the Hofburg palace in Vienna, Austria on April 8, 2021 as Austria resumes Covid-19 restrictions.

JOE KLAMAR | AFP | Getty Images


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UPDATE 2-German yields rose, reversing after industrial output supported the rally | Instant News

* Eurozone suburban government bond yields tmsnrt.rs/2ii2Bqr (Adding details, updating prices)

LONDON, April 14 (Reuters) – German government bond yields climbed to a two-week high in late trading Wednesday, unleashing earlier rallies as manufacturing and industrial data in the eurozone and Japan hinted at hurdles ahead as the global economy battles the coronavirus pandemic.

Eurozone industrial output decreased in February after increasing in January, and Japanese machinery orders fell the most in about a year.,

Eurozone bond yields – which tracked US Treasury yields higher on hopes for a strong economic recovery later this year and higher inflation – initially fell.

But that turned around and the yield on German 10-year bond, the benchmark for the single currency bloc, rose to its highest level in more than two weeks in Wednesday night trading at -0.264%, above the level touched on Tuesday when a flurry of bond sales weighed on markets. . .

Bond yields also picked up, with a number of Federal Reserve speakers scheduled for Wednesday after the inflation data beat expectations slightly.

Dallas Federal Reserve Bank President Robert Kaplan reiterated his view that the Fed should start attracting support from the economy sooner than most of his colleagues thought.]

“The overall picture is for a hike in yield,” said ING rate strategist Antoine Bouvet.

“A lot of people believe that a strong recovery is in prices, but this is down to the Fed’s communications – the start of the tapering debate needs to take place this year given the potential strength of the recovery.”

The eurozone economy still stands on “two crutches” of monetary and fiscal stimulus, and this cannot be picked up before a full recovery, said European Central Bank president Christine Lagarde.

Some policymakers have expressed hope the ECB can start reducing bond purchases in the third quarter as the COVID-19 vaccination rate increases.

In the primary market, Ireland hired a syndicate of banks to sell 20-year bonds, which will raise 2-3 billion euros according to market sources.

The government resumed its long-term bond issuance after the issuance subsided with a February bond sell-off, with Austria and Spain selling 50 and 15-year bonds respectively on Tuesday.

The European Union also announced plans for an 800 billion euro recovery fund loan on Wednesday, which will raise about 150 billion euros per year from the end of this year.

Reporting by Abhinav Ramnarayan, additional reporting by Yoruk Bahceli; Edited by Ana Nicolaci da Costa, Kirsten Donovan and John Stonestreet


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REFILE-UPDATE 2-Austria follows Italy as the government continues ultra-long issuance | Instant News

(Clears repeating data about Austria)

* Austria will sell 50-year bonds, following Italy

* Spain will sell 15 year bonds

* Bond yields rise as investors digest the issuance

April 13 (Reuters) – Austria on Tuesday moved to lock in its current low borrowing costs with 50-year bonds, following a half-century issue from Italy, while Spain launched a 15-year newspaper.

Both deals are made through a syndicate of banks, with Austria to raise 1.75 billion euros and Spain six billion euros, according to a key manager’s memo seen by Reuters.

Last week’s Austrian and Italian bonds marked a resumption of a very long term, 50-year issuance.

After a strong start to the year with 50-year selling from France, Spain and Belgium, the bond selloff was driven by higher growth expectations and inflation weighed on bond buyers with losses and such issuance eased.

“European investors still rely on a lower narrative for the long term and therefore there is no fear on their part to buy longer term bonds as there is no fear of regime change in growth and inflation dynamics,” said Antoine Bouvet, senior pricing strategist. on ING.

“It is true that tariffs have moved higher, but in the grand scheme of things, they are still quite low.”

The European Central Bank has calmed the market by increasing its rate of asset purchases.

Ultra-long-dated bonds are considered to be one of the most risky government debt problems, because they are more sensitive to changes in the underlying interest rates. In addition, the ECB, which is pushing down euro area borrowing costs, has not bought bonds of more than 30 years.

Austria saw demand 13 billion euros and Spain 42 billion euros as both books shrank after the government cut offered yields.

That’s well below the 65 billion euros in offers Madrid received for a 50-year contract in February and 18 billion euros for Austria’s 100-year bonds last year.

Bouvet said the lower demand may descend to a large increase in yields this year meaning investors such as pension funds will no longer need to buy longer-term bonds. Some governments are also trying to get rid of bidders they believe will deliver an increased order

Euro area bond yields barely moved as data showed US inflation rose 2.6% year-on-year in March, slightly above forecasts.

But massive supplies weighed on the market, with German 10-year yields almost hitting a two-week high of -0.271% and Italian 10-year yields at their highest in more than a month at 0.78%.

Investors also digested the supply of bonds from the Netherlands, Italy, the UK and the sale of $ 24 billion worth of US 30-year bonds, all of which were sold at auction.

Reporting by Yoruk Bahceli; Edited by Catherine Evans, Alexandra Hudson and Giles Elgood


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Austria, Spain followed Italy by selling long-term debt | Instant News

* Eurozone suburban government bond yields tmsnrt.rs/2ii2Bqr

April 13 (Reuters) – A 50-year bond sale from Austria on Tuesday will test further investor interest in ultra-long-dated debt after high demand for a similar sale from Italy last week, while Spain will sell a 15-year newspaper.

The prospect of a substantial new supply helped push bond yields in the euro area slightly higher in early trading Tuesday. Bond yields move inversely with prices.

The two countries sold their debts, also including four-year bonds from Austria, through a syndication, in which issuers use banks to sell their debt directly to investors, according to a lead manager memo seen by Reuters.

Investors must also digest the reopening of 15-year bonds from Italy to 2 billion euros, 1 billion pounds of 50-year bonds from the UK, and $ 24 billion in 30-year US bonds, all of which will be sold through more traditional means. auction format.

German 10-year yields, the benchmark for the bloc, were up by about a basis point to -0.29% at 0738 GMT. ING analysts said they expect Tuesday’s supply to cause long-dated government bonds to underperform.

The deal follows last week’s publication of a 50-year syndicate from Italy, which received nearly 13 times the demand for the five billion euros it raised.

After a strong start to the year, sales of ultra-long debt have slowed since February, when yields rose sharply as investors bet that a large US fiscal stimulus package will reignite growth and inflation that hurt safe-haven bonds.

France, Belgium and Spain all sold their 50-year bonds earlier in the year as they tried to lock in lower borrowing costs. But all of those bonds fell sharply during the volatile February patch.

The European Central Bank has since calmed European bond markets by increasing the rate of buying its assets.

The price of a 50 year bond, among the longest term issued by the government, is more sensitive to changes in the benchmark interest rate. The fact that the ECB, whose asset purchases have pushed down the euro area’s borrowing costs, has not purchased bonds in more than 30 years adds additional sensitivity.

On the data front, investors will be watching the German ZEW investor morale survey and US inflation data. A Reuters poll forecasts US inflation to jump 2.5% year-on-year in March, from 1.7% in February.

Reporting by Yoruk Bahceli; Edited by Catherine Evans


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UPDATES 2-Euro bonds yield flat, new Italian issuance in focus | Instant News

* Eurozone suburban government bond yields tmsnrt.rs/2ii2Bqr (Updating prices, adding backgrounds)

LONDON, April 7 (Reuters) – Eurozone bond yields were flat on Wednesday, with southern European debt steady after a sell-off in the previous session as markets braced for fresh supplies from Italy and Portugal.

Italy began the process of selling its new 50-year and 7-year bonds through a syndicate of banks on Wednesday, after marking new issues the previous day.

Portugal raised, through a bank syndicate, 4 billion euros of 10-year bonds on the back of a demand of 30 billion euros, according to a memo of the chief manager.

The tone on eurozone debt markets was largely weak, with most 10-year bond yields down 1-2 basis points (bps) on the day following falling overnight US Treasury yields.

“Overall, the higher pull from US interest rates is still alive and well and the rebound in eurozone bond markets is largely technical and temporary,” said ING senior rates strategist Antoine Bouvet.

The yield on the German 10-year Bund was flat at -0.32%, down from recent highs around -0.26%.

The IHS Markit Eurozone Purchasing Managers’ Index (PMI) rose to 49.6 in March from February 45.7, higher than the flash forecast of 48.8 and just below the 50 mark that separates growth from contraction.

The eurozone economy is on track for a strong recovery in the second half of this year that could allow the European Central Bank to start phasing out its emergency bond purchases in the third quarter, said Dutch central bank head Klaas Knot.

The ECB bought net assets of 6.178 billion euros ($ 5.20 billion) last week as part of a quantitative easing program, below the 23.995 billion euros it bought a week earlier.

The yield on Italy’s 10-year bond was unchanged at 0.70%, after rising sharply on Tuesday as investors braced for new supplies. The difference in the yield on the German Bund is just over 100 bps.

Analysts said bond spreads are back in focus, especially after last month’s decision by Germany’s constitutional court to stop ratification of the EU Recovery Fund prompted investors to reassess some of the risks to peripheral bonds.

“Tesoro’s (Italian Treasury’s) announcement of a new 50-year BTP syndication caught the market off guard, with 10-year and 30-year spreads versus the Bund widened by 7 bps to its highest level in nearly a month,” said Michael Leister, chief interest rate strategist. at Commerzbank, referring to Tuesday’s market moves.

“While thinner Easter liquidity may also play a role, this move adds weight to our short tactics in Italy versus semi-core (bonds) and Spain as the risk of indigestion is exacerbated by doubts about the NGEU (Next Generation EU), the ECB’s settles and makes a difference. the less generous. “(Reporting by Dhara Ranasinghe; Additional reporting by Yoruk Bahceli; Editing by Pravin Char)


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