Italian 10-year yields were seven basis points from their lowest in six weeks after borrowing costs fell at an offering of 7.2 billion euros ($9.5 billion) of debt, including new three- year notes. Portuguese two-year securities were little changed as Moody’s Investors Service said a Constitutional Court ruling last week that blocks key austerity measures was a hurdle to the nation meeting the conditions of its rescue package.
“Ireland should get an extension of debt interest payments given the progress it’s made,” said Nick Stamenkovic, a strategist at RIA Capital Markets Ltd. in Edinburgh. “Portugal is a bit up in the air because of the constitutional decision. Portugal could continue to struggle near term.”
Irish 10-year bond yields dropped two basis points, or 0.02 percentage point, to 3.89 percent at 4:52 p.m. London time. It fell to 3.88 percent, the lowest since Dec. 22, 2006. The price of the 3.9 percent security maturing March 2023 rose 0.145, or 1.45 euros per 1,000-euro face amount, to 100.045.
Italian 10-year yields rose two basis points to 4.33 percent. The rate reached 4.26 percent on April 8, the lowest since Feb. 25. Yields on similar-maturity Spanish bonds dropped as much as three basis points to 4.61 percent, the lowest since Nov. 17, 2010, before being three basis points higher at 4.67 percent.
Finance Minister Michael Noonan told reporters in Dublin today that he hoped for a political decision tomorrow on an extension to Ireland’s bailout loans, even as he said a formal decision is not possible. European finance ministers are due to meet in the Irish capital tomorrow.
Portugal’s court ruling makes it more difficult for the country to deliver necessary fiscal adjustment and complete its seventh quarterly program review, Moody’s said.
The yield on the country’s two-year notes was at 2.92 percent.
Italy sold 4 billion euros of new 2.25 percent 2016 notes at 2.29 percent, from the 2.48 percent on similar-maturity debt allotted on March 13. The Rome-based Treasury also allotted 1.67 billion euros of 2028 bonds and 1.5 billion euros of floating- rate securities maturing in 2017.
European governments and the European Financial Stability Facility have sold 31.7 billion euros of bonds and notes this week. That’s the most for any week this year, according to Alexander Aldinger, an interest-rate strategist at Commerzbank AG in Frankfurt.
“Yields in Italy continue to grind toward their more reasonable fundamental values,” said Michael Markovich, head of global interest-rate research at Credit Suisse Group AG in Zurich. Credit Suisse recommends investors buy Italian debt of all maturities, he said.
German 10-year bund yields were little changed at 1.30 percent after climbing nine basis points over the past three days. The rate fell to 1.20 percent on April 5, the lowest level since July 24.
The annual inflation rate in Germany, calculated using a harmonized European Union method, held at 1.8 percent March, unchanged from February, the Federal Statistics Office in Wiesbaden said. The outcome was in line with the median estimate of 22 economists in a Bloomberg News survey and confirmed a preliminary figure released on April 2.
Italian government bonds returned 2.1 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German government bonds rose 0.5 percent and Spanish bonds earned 5.4 percent, the indexes show.