Bonds: Italy in the eye of the debt storm

Date: Tuesday 29 Nov 2011

The euro debt crisis appeared to be on the brink of claiming its latest victim as Italy was forced to pay significantly over 7% for a series of debt notes.

At an auction this morning Italian 10 year bonds were sold at 7.56% while three year bonds went for an eye watering 7.89%.

Italy cannot continue to finance its debts at such high rates, although the fact there was considerable demand at the auctions seemed to cheer investors.

On the secondary market, Italian 10 year debt was yielding 7.234%, up 0.1 of a basis points on the open. In Madrid, equivalent Spanish bonds fell 18.2 basis points to 6.39% while in Brussels, Belgian 10 year notes fell 27.4 basis points to 5.303%.

French 10 year debt fell 7.9 basis points on the day to 3.531% while German benchmark bunds rose 3.1 basis points to 2.33%. UK Gilts were yielding 2.23% at the close in London, down 3.9 basis points on the day. 10 year US treasuries saw their interest rates rise 4.3 basis points to 2.02%.

The general trend of lower yields will be welcome news for EU finance ministers meeting in Brussels to try to agree a way of increasing the firepower of Europe’s financial safety net, the European Financial Stability Fund (EFSF). They will alo discuss options for Italy, one of which is thought to include giving money to the IMF, which it can then loan to Italy.

BS

« Go back to news channel

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE