Higher yields for the Italian bond auction, Spain credit-rating down to BBB+ raises concerns
Italy auctioned a total of €5.95 bln in bonds on Friday, less than the maximum target of €6.25 bln, at higher borrowing costs due to rising concerns after Standard & Poor’s announced its decision to downgrade Spain’s long-term debt rating from A+ to BBB+ to reflect the Spanish banks’ needs for more capital and the growing unemployment rate.
The Italian Tesoro auctioned a total of €4.916 bln in five and ten-year bonds, just below its maximum target of €5 billion. They sold €2.416 bln of its 5-year paper at an average yield of 4.86 percent compared to 4.18 percent on March 29th and €2.5 billion of 10-year bonds at 5.84 percent versus 5.24 percent at the previous sale. The Treasury also sold bonds maturing in 2016 and 2019 at an average cost of 4.29 and 5.21 percent respectively.
EUR/USD peaked to a session high of 1.3243 shortly after the results from the Italian auction were announced.
RTFX Ltd (“RTFX”) is licensed to conduct investment services business by the Malta Financial Services Authority. This information does not constitute an offer or solicitation and is provided for information purposes only. This information shall not be deemed to constitute advice and should not be relied on as such to enter into a transaction or for any investment decision. Any opinions expressed in this document represent the views of RTFX at the time of preparation. They are thus subject to change without notice. RTFX believes that the information contained herein is accurate as at the date of publication. However, no warranty of accuracy is given by RTFX and no liability in respect of any errors or omissions, including any third party liability, are accepted by RTFX or any director, officer or employee.