Spain Bonds Rise on Current-Account Surplus; Germany Sells Debt
Spain’s government bonds rose, with 10-year yields falling the most in a week, after the nation posted its biggest current-account surplus since the euro was introduced in 1999.
Spanish and Italian two-year notes extended their third monthly advance as the data boosted optimism the sovereign-debt crisis can be contained. Greek bonds dropped for a fifth day as euro-area finance ministers said the nation would need to make deeper spending cuts to keep financial aid flowing. Germany’s 30-year bunds advanced after demand at an auction of the securities increased to a euro-era record.
“The figures in Spain were more positive than we forecast,” said Ralf Umlauf, a research analyst at Landesbank Hessen-Thueringen in Frankfurt. “We see peripheral bonds rallying,” he said, referring to the securities issued by the region’s most-indebted nations.
Spain’s 10-year yield fell six basis points, or 0.06 percentage point, to 5.62 percent at 4:51 p.m. London time after dropping as much as seven basis points, the most since Oct. 19. The 5.85 percent bond due in January 2022 rose 0.39, or 3.90 euros per 1,000-euro ($1,298) face amount, to 101.625.
The nation’s two-year yields declined seven basis points to 3.02 percent, extending their monthly drop to 42 basis points. Italian two-year yields fell six basis points to 2.27 percent.
Spain’s current account surplus widened to 1.24 billion euros in August from 500 million euros in July, which was the first positive reading since 1999, the central bank said. Foreign portfolio investment showed an inflow of 2.34 billion euros in August, the first positive outcome since February 2011.
European policy makers pressed Greece for more cuts as the nation requested a 31 billion-euro aid payout in November and faced a sixth year of recession in 2013.
“We called on the Greek authorities to solve remaining issues so as to swiftly finalize the negotiations,” Luxembourg Prime Minister Jean-Claude Juncker said in an e-mailed statement after leading a two-and-a-half-hour conference call with the region’s finance chiefs. He said the aim was “to conclude on the program” at a scheduled Nov. 12 meeting in Brussels.
The yield on Greece’s 10-year bond rose 11 basis points to 17.77 percent after reaching 18.14 percent, the highest since Oct. 12. The price fell to 31.19 percent of face value.
Germany’s 30-year yield dropped four basis points to 2.30 percent, trimming this month’s increase to five basis points. The 10-year yield fell two basis points to 1.46 percent.
The nation sold 1.7 billion euros of the 30-year bonds at an average yield of 2.34 percent, compared with a record-low yield of 2.17 percent at the previous sale on July 25. Investors bid for 2.7 times the amount of securities allotted, up from 1.5 times at the prior auction, and the most since at least 1997, according to data compiled by Bloomberg.
“This is a good auction result,” Lyn Graham-Taylor, a fixed-income strategist at Rabobank International in London, wrote in an e-mailed report. “This is likely to have been driven by this being the last ultra-long dated issuance of the year for Germany.”
France sold 4.37 billion euros of 10-year bonds at an average yield of 2.22 percent, down from 2.28 percent on Oct. 4. It also auctioned 1.49 billion euros of seven-year notes and 1.64 billion euros of securities maturing in 2035.
French 10-year yields were little changed at 2.24 percent.
German bonds returned 3.2 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Spanish securities gained 2.9 percent, while France’s rose 8.2 percent.