29-07-2014, 08:05 AM
Spain, Italy borrowing costs hit fresh lows
AFP JULY 29, 2014 4:30AM
Interest on Spanish and Italian debt has fallen to record lows while Portugal's continues to drop as investor concerns about the eurozone's former laggards eases.
Borrowing costs for southern European countries have fallen since the European Central Bank brought in unprecedented measures in June to help boost weak inflation in the bloc.
Investors have also been cheered by upbeat data, particularly in the bloc's fourth-largest economy Spain, which expanded at its strongest rate for six years in the second quarter.
"The fact that these rates continue to decline and there is no reversal shows that nobody sees issues that are likely to push yields higher," said Patrick Jacq, a bond strategist at BNP Paribas, on Monday.
Spanish 10-year bonds sank to 2.488 per cent, a record low for the secondary market where investors trade existing debt, down from 2.541 per cent on Friday.
Italy's borrowing costs also touched a new low of 2.666 per cent, down from 2.714 per cent.
The improving sentiment marks a sharp turnaround from recent years when investors feared Spain and Italy could join Greece and Portugal in needing an international bailout.
Sentiment towards Portugal has also improved in recent weeks after its credit rating was upgraded by Moody's ratings agency thanks to its improving public finances.
Portugal, which exited its own 78-billion-euro ($113.61bn) international bailout in May, has seen its borrowing costs fall as a result, sinking on Monday to 3.570 per cent, from 3.640 per cent Friday.
"The market accepts that the country is moving away from a critical situation," Mr Jacq said.
AFP JULY 29, 2014 4:30AM
Interest on Spanish and Italian debt has fallen to record lows while Portugal's continues to drop as investor concerns about the eurozone's former laggards eases.
Borrowing costs for southern European countries have fallen since the European Central Bank brought in unprecedented measures in June to help boost weak inflation in the bloc.
Investors have also been cheered by upbeat data, particularly in the bloc's fourth-largest economy Spain, which expanded at its strongest rate for six years in the second quarter.
"The fact that these rates continue to decline and there is no reversal shows that nobody sees issues that are likely to push yields higher," said Patrick Jacq, a bond strategist at BNP Paribas, on Monday.
Spanish 10-year bonds sank to 2.488 per cent, a record low for the secondary market where investors trade existing debt, down from 2.541 per cent on Friday.
Italy's borrowing costs also touched a new low of 2.666 per cent, down from 2.714 per cent.
The improving sentiment marks a sharp turnaround from recent years when investors feared Spain and Italy could join Greece and Portugal in needing an international bailout.
Sentiment towards Portugal has also improved in recent weeks after its credit rating was upgraded by Moody's ratings agency thanks to its improving public finances.
Portugal, which exited its own 78-billion-euro ($113.61bn) international bailout in May, has seen its borrowing costs fall as a result, sinking on Monday to 3.570 per cent, from 3.640 per cent Friday.
"The market accepts that the country is moving away from a critical situation," Mr Jacq said.