Tag Archives: State Debt Auction

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)

.



image source

RENEWAL 3-Brazil’s public debt hit a record $ 934 billion as the Treasury increases its emergency cash bearing | Instant News


(Adding graphics)

BRASILIA, March 24 (Reuters) – Brazil’s record pile of public debt rose a further above 5 trillion reais ($ 900 billion) in February, the Treasury Department said on Wednesday, as it dumped most of its new net issuance into an emergency cash buffer, or liquidity. . pillow.

The Treasury Department also said borrowing costs were lowest anchored with service costs near all-time lows. The central bank’s rate hike this week will not affect its strategy and could even increase investor demand for Brazilian debt, he added.

Total federal debt rose 2.75% in February to 5.2 trillion reais ($ 934 billion), while total domestic debt stock rose 2% to 4.95 trillion reais, the Treasury Department said.

The Treasury Department said the liquidity cushion rose 15.8% in nominal terms to 933 billion reais from 806 billion the previous month, enough to cover up to seven months of debt maturity. Debt due in April and May alone is around 581 billion reais, he added.

The increase was mainly due to the new net issuance of 111.5 billion reais, the third highest record for the month, the Ministry of Finance said.

With inflation at a four-year high of 5.2% and well above the central bank’s 2021 target of 3.75%, the central bank raised Selic’s benchmark interest rate this week by 75 basis points to 2.75%.

Luis Felipe Vital, head of debt management, told reporters in an online press conference that this “is not the Ministry of Finance’s business at the moment.”

“I think this moment in the monetary policy cycle is good for the demand for various securities, for example the LFT (floating rate), or securities with a longer term,” he said.

The average cost of servicing NTN-B records linked to inflation in the year to February surged to a four-year high of 11.16% from 10.54%, the Ministry of Finance said.

The average interest rate on domestic federal debt stocks remained stable at a record low of 7.15%, and the average interest rate for serving the broader public debt stock slumped to a new low of 8.11% from 8.29%.

($ 1 = 5.5715 reais)

Reporting by Jamie McGeever, Isabel Versiani and Gabriel Ponte; Edited by Hugh Lawson and Richard Chang

.



image source

The UK is attracting record demand for bonds linked to inflation | Instant News


LONDON (Reuters) – UK 10-year index-linked bonds attracted record demand at a government auction on Wednesday, adding to signs of concern that inflation may pick up faster than expected.

FILE PHOTO: Pound banknotes seen in illustration taken on January 6, 2020. REUTERS / Dado Ruvic / Illustration

Investors made a bid of 2.832 billion pounds ($ 3.93 billion) for the index-linked bond offering due in August 2031.

That gives a bid-to-cover ratio of 3.54, the highest for an index-linked bond since such auctions began in 1998.

Inflation concerns have played a large role in the US Treasury selloff this year, with a further impact for conventional gilts, which saw their biggest monthly decline since October 2016 in February.

UK index-linked bonds pay the returns associated with the inflation retail price index, and the 2031 bond sells for a real yield of -2.595%, giving investors an annual return of 2.595 percentage points below the prevailing RPI rate.

The annual RPI was 1.6% in January, and gilts prices linked to the 10-year index in terms of RPI averaged just under 3.4%, the highest since late 2019 and up from over 3.0% at the start of the year.

The Bank of England is targeting its consumer price index to measure inflation, which currently stands at 0.7% but the BoE and most economists expect it will rise closer to its target of 2% by the end of the year if not sooner.

“Commodity prices rose immediately and the underlying effect will have a significant increase in the energy inflation component of the CPI in the coming months,” wrote Nomura economists in a note to clients.

BoE chief economist Andy Haldane warned against complacency last month, likening inflation to a tiger on the prowl.

Wednesday’s auction is the UK’s penultimate sale of inflation-linked bonds this financial year, when the UK’s Office of Debt Management will sell more than 33 billion pounds of index-related debt, 7% of total issuance.

For 12 months starting April, DMO plans to sell the same volume.

($ 1 = 0.7206 pounds)

Reporting by David Milliken; Edited by Hugh Lawson

.



image source

UPDATED The 2-Draghi Effect pushed the Italy-Germany gap to its lowest level in 5 years | Instant News


* Italian 10-year yields fell 10 bps this week

* German yields rise despite poor industry data

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

MILAN / LONDON, Feb 5 (Reuters) – Italian 10-year government bond yields headed for their biggest weekly decline since July on Friday, while the spread on German yields narrowed to the smallest level in five years as former head of the European Central Bank Mario Draghi starts talks to form a new government.

Trading on eurozone debt markets was generally weak at the end of the week. It was slightly moved by data showing US job growth rebounded moderately in January, in line with forecasts and which economists said supported the case for more government aid money.

Global stocks approach record highs as progress in vaccine distribution and hopes of US stimulus pushes bets on further normalization in the global economy.

That backdrop boosted sentiment towards riskier assets such as European peripheral bonds, with Italy set to end the week at its highest following this week’s political developments.

Draghi, given the mandate to form a new Italian government, will end a round of consultations on Saturday. It remains unclear whether he can win support from the anti-establishment 5 Star Movement, the largest party in parliament.

Italian 10-year BTP, or government bonds, fell as far as 0.51%, the lowest level since January 11, before rebounding to 0.54%. It’s down more than 10 bps this week.

Italy / Germany’s 10-year yield difference narrowed to around 94 basis points, since at least the start of 2016.

“We have seen how the market is not only like Draghi, but also likes Draghi and foreign investors are supporting the rally in BTP,” said MFS fixed income research analyst Annalisa Piazza.

Piazza said room for further tightening was limited, although Italy could see further performance over its eurozone counterparts if Draghi’s government succeeds in executing its program in the medium term.

“The market is expecting a government led by Draghi. But even if the former ECB chief is unable to form a government, we will see a sell-off in the short term which will translate into interest rate compression in the long term, “said Althea Spinozzi, fixed income strategist at Saxo Bank.

The UniCredit analyst added that the spread of further compression in Italy will likely depend on the extent of parliamentary support for the government and the willingness of foreign investors to increase their exposure to the BTP market again.

They said 2015 lows of 88 basis points between German and Italian yields “don’t seem out of reach”.

Bond yields also declined in Spain and Portugal.

News of a decline in German industrial orders in December put a brief pressure on German yields.

But Bund yields soon headed higher, with the benchmark 10-year note touching the highest since early September at -0.413% and putting it on track for its biggest weekly jump since August.

Reporting by Sara Rossi and Tommy Wilkes Additional reporting by Dhara Ranasinghe Editing by Kirsten Donovan

.



image source

UPDATED The 2-Draghi Effect pushed the Italy-Germany gap to its lowest level in 5 years | Instant News


* Italian 10-year yields fell 10 bps this week

* German yields rise despite poor industry data

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

MILAN / LONDON, Feb 5 (Reuters) – Italian 10-year government bond yields headed for their biggest weekly decline since July on Friday, while the spread on German yields narrowed to the smallest level in five years as former head of the European Central Bank Mario Draghi starts talks to form a new government.

Trading on eurozone debt markets was generally weak at the end of the week. It was slightly moved by data showing US job growth rebounded moderately in January, in line with forecasts and which economists said supported the case for more government aid money.

Global stocks approach record highs as progress in vaccine distribution and hopes of US stimulus pushes bets on further normalization in the global economy.

That backdrop boosted sentiment towards riskier assets such as European peripheral bonds, with Italy set to end the week at its highest following this week’s political developments.

Draghi, given the mandate to form a new Italian government, will end a round of consultations on Saturday. It remains unclear whether he can win support from the anti-establishment 5 Star Movement, the largest party in parliament.

Italian 10-year BTP, or government bonds, fell as far as 0.51%, the lowest level since January 11, before rebounding to 0.54%. It’s down more than 10 bps this week.

Italy / Germany’s 10-year yield difference narrowed to around 94 basis points, since at least the start of 2016.

“We have seen how the market is not only like Draghi, but also likes Draghi and foreign investors are supporting the rally in BTP,” said MFS fixed income research analyst Annalisa Piazza.

Piazza said room for further tightening was limited, although Italy could see further performance over its eurozone counterparts if Draghi’s government succeeds in executing its program in the medium term.

“The market is expecting a government led by Draghi. But even if the former ECB chief is unable to form a government, we will see a sell-off in the short term which will translate into interest rate compression in the long term, “said Althea Spinozzi, fixed income strategist at Saxo Bank.

The UniCredit analyst added that the spread of further compression in Italy will likely depend on the extent of parliamentary support for the government and the willingness of foreign investors to increase their exposure to the BTP market again.

They said 2015 lows of 88 basis points between German and Italian yields “don’t seem out of reach”.

Bond yields also declined in Spain and Portugal.

News of a decline in German industrial orders in December put a brief pressure on German yields.

But Bund yields soon headed higher, with the benchmark 10-year note touching the highest since early September at -0.413% and putting it on track for its biggest weekly jump since August.

Reporting by Sara Rossi and Tommy Wilkes Additional reporting by Dhara Ranasinghe Editing by Kirsten Donovan

.



image source