Bloomberg
May 17, 2011
German bonds rose as Luxembourg Prime Minister Jean-Claude Juncker’s proposed “reprofiling” of Greek maturities failed to ease concern that Europe’s debt crisis is worsening, bolstering demand for the least risky securities.
Greek bonds closed lower after initially gaining on speculation Juncker’s proposal would limit losses for private bondholders. Portuguese bonds fell after yesterday’s decision by European finance chiefs to endorse a 78 billion-euro ($111 billion) bailout for the Iberian nation. Bunds were also lifted as data showed investor confidence in Europe’s largest economy fell for a third month, pushing 10-year yields to within two basis points of a two-month low.
“The talk of a Greek debt reprofiling is a driver, as it is certainly not a simple issue to resolve,” said Peter Chatwell, a fixed-income strategist at Credit Agricole Corporate & Investment Bank in London. “The market is probably factoring in the issue dragging on for a number of weeks at least, and this is another driver for bunds.”
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