• Nation’s securities returned 4.8 percent in past three months
  • Spanish five-year note yield drops to record low Tuesday

Spain’s government bonds have handed investors the highest return among euro-area sovereign debt in the past three months as the European Central Bank’s bond-purchase program shields them from the nation’s political turmoil.

Britain’s vote to leave the European Union has prompted speculation that the ECB will extend its 80 billion-euros ($90 billion) per month asset-purchase program beyond the planned March 2017 end date. This has driven bond yields lower and prompted investors to opt for the higher-yielding peripheral debt from countries such as Italy and Spain. The political and banking crises in those countries have done little to curb demand.

“Expectations of more ECB easing,” is helping government bonds, said Lyn Graham-Taylor, a rates strategist at Rabobank International in London. “It seems to be very much that in terms of country-specific risks it is pretty much shielded by what’s going on with the ECB.”

Spain’s government securities returned 4.8 percent in the three months through Monday, according to Bloomberg World Bond Indexes. That’s the most among the euro region’s sovereign debt, with Italy’s earning 3.8 percent and Germany’s 2.2 percent.

The political gridlock since December in Spain showed nascent signs of a resolution as the top two political parties are scheduled to hold talks this week to form a government.

Spain’s 10-year bond yield increased five basis points, or 0.05 percentage point, to 0.98 percent as of 3:23 p.m. London time. The 1.95 percent bond due in April 2026 fell 0.445, or 4.45 euros per 1,000-euro face amount, to 108.905. The yield dropped to a record low of 0.913 percent on Aug. 11. The nation’s five-year note yield touched an all-time low of 0.097 percent on Tuesday.

Benchmark German 10-year bund yields rose three basis points to minus 0.04 percent.

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