Bonds: Italy over 7% after Unicredit fiasco

Date: Thursday 05 Jan 2012

Italian debt yields hovered in the danger-zone above 7% today after yesterday's failed rights issue by its biggest bank, Unicredit.

Spain's Economy minister also raised eyebrows by suggesting Spanish lenders may need to raise €50bn to cover the holes left on their balance sheets by the country's property market collapse.

By the close these were the yields on benchmark 10 year bonds amongst some of the most watched countries:

Italy: 7.09% (+15bp)
Spain: 5.64% (+21bp)
France: 3.35% (+4bp)

France managed to sell nearly €8bn in bonds this morning. Of the total taken up by investors €4.02bn was in 10 year bonds with an average yield of 3.29%, up 11 basis points on a similar auction at the start of December.

Hungary is still a source of concern. The country failed to meet its issuance target at an auction of short-term debt this morning.

Eurozone governments are thought to need €262bn to refinance their debts in the first three months of 2012. In essence they will be competing against each other for the funds so the pressure on yields is expected to remain intense.

BS

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