Spanish Notes Rise on Collateral Speculation; French Bonds Drop
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Spanish two-year notes rose for a seventh day, the longest streak of gains in more than a year, on speculation banks bought the debt to use as collateral when the European Central Bank starts offering three-year loans tomorrow.
France’s 10-year bonds fell for the first time in five days as the nation sold 7 billion euros ($9.1 billion) in Treasury bills after Fitch Ratings lowered its credit outlook. Belgium’s two-year notes trimmed six days of gains after its rating was cut two levels to Aa3 by Moody’s Investors Service on Dec. 16. When the ECB starts its longer-term refinancing operation tomorrow, banks can borrow unlimited funds in return for eligible collateral, including euro-region government bonds.