EuropeStay updated with Business News, Pakistan news, Current world news and latest world news with Business Recorder.., 27 Feb 2015 11:25:49 +0000SRA Framework 2.0en-gbMexico to raise 2.5bn from 2024 and 2045 bonds The United Mexican States has launched a 2.5bn dual tranche 2024 and 2045 bond issue, according to a lead.

The deal is split equally between a 1.25bn 2024 note that will price at mid-swaps plus 110bp, and a 1.25bn bond that will price at mid-swaps plus 190bp.

Mexico began marketing the 2024 note at mid-swaps plus 135bp area today, before revising guidance to 125bp area.

The longer tranche was offered to investors at 205bp area over mid-swaps, before tightening to 195bp area.

Barclays, Deutsche Bank and Santander are running the deal.

Mexico is rated A3 stable by Moody's, BBB+ stable by Standard & Poor's and BBB+ stable by Fitch.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui)EuropeThu, 26 Feb 2015 15:36:07 +0000
UK gilt prices extend rally into 2nd day after Yellen comments British government bond prices hit their highest level in a week on Wednesday, extending a rally fuelled by Federal Reserve chair Janet Yellen's suggestion that the central bank was in no rush to raise interest rates.

The 10-year gilt yield reached a low of 1.688 percent, its lowest level since last Wednesday, and at 1540 GMT was down 6 basis points on the day at 1.70 percent.

Thirty-year gilt yields fell to a two-week low of 2.384 percent, also 7 basis points down on the day.

Speaking on Tuesday, Yellen held back from giving a clear view on when the Fed will begin raising rates, and hinted that it might not be until at least two policy meetings have passed.

"There's been a general rally in core European fixed income that's been catching up with the post-close Fed (market) moves last night," said Simon Peck, rates strategist at RBS.

Gilts sharply outperformed German government debt earlier in the day, with the yield spread between 10-year gilts and Bunds bottoming out at 134.6 basis points, the lowest level since last Tuesday.

Later on Wednesday the spread was at 137 basis points, down around 2 basis points on the day.

Peck said that imminent gilt coupon payments provided gilt prices with added impetus going into the end of the week.

"It's difficult to judge whether that's impacting that much on today's price action, but it's another relevant supportive consideration for the market over the next few days."

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui)EuropeWed, 25 Feb 2015 16:20:56 +0000
Russian Finance Minister sells 10bn roubles of OFZ bonds, average yield 13.5pc

imageMOSCOW: Russia's Finance Ministry sold 10 billion roubles ($160 million) of OFZ treasury bonds at auction on Wednesday at an average yield of 13.5 percent.

The OFZ bonds mature in January 2020. It was the second week in a row that the Finance Ministry sold all of the bonds on offer, reflecting stronger demand.

The ministry has seen better bids at its weekly bond auctions recently after being forced to cancel many auctions last year due to market turbulence linked to the Ukraine crisis.

Copyright Reuters, 2015

]]> (Nasir Ahmed)EuropeWed, 25 Feb 2015 12:38:24 +0000
Gilts track US Treasuries higher after Fed's Yellen speaks British government bond prices rose strongly on Tuesday, tracking U.S. Treasuries higher after Federal Reserve Chair Janet Yellen suggested it could be months before the U.S. central bank raises interest rates.

At 1633 GMT the 10-year gilt yield was down around 4 basis points on the day at 1.76 percent, wiping out Monday's rise, with much of the move following Yellen's testimony to U.S. politicians.

The Fed boss said her policy-setting commmitee would start to consider interest rate hikes on a "meeting-by-meeting basis", though she added that a rate increase was not likely for at least the next couple of meetings.

"Gilts are pretty much going hand-in-hand with Treasuries in this latest move, and they're responding to what Janet Yellen is saying," said John Wraith, strategist at UBS.

Bank of England rate-setters, including Governor Mark Carney, appeared before British parliamentarians on Tuesday. Carney urged employers not to use near-zero inflation as an excuse to offer staff low wage settlements.

"Maybe the market had been a little bit nervous about (the BoE testimony), but there was nothing much to worry about and gilts have staged a bit of a relief rally," said Wraith.

Thirty-year benchmark gilt yields fell most sharply, down by 5 basis points on the day at a one-week low of 2.453 percent.

Gilts prices outperformed those of equivalent German Bunds, which fell slightly as signs that a compromise will be reached between Greece and other euro zone countries lifted European stocks.

The spread between British and German 10-year bond yields fell to below 139 basis points, down about 5 basis points on the day and also close to a one-week low.

Copyright Reuters, 2015

]]> (Imaduddin)EuropeTue, 24 Feb 2015 18:22:42 +0000
Ukraine bonds fall to 40 cents in dollar as sell-off grips Russian and Ukrainian sovereign bonds sold off heavily on Monday, with the latter now trading around 40 cents in the dollar as continued fighting in eastern Ukraine raised fears for both credits.

The violence, and sanctions imposed for Russia's role in it, have exacerbated economic problems caused by falling oil prices, with Moody's cutting Russia's rating to junk late on Friday.

In Ukraine, the fighting is pushing the domestic economy deeper into recession and is delaying aid from Western lenders, raising fears that an upcoming debt restructuring will inflict bigger-than-expected losses on bondholders.

"There is a vicious circle going on between the currency and the bonds," said David Hauner, head of EEMEA debt and strategy at Bank of America/Merrill Lynch.

"The hryvnia weakness raises the possibility of a more painful restructuring with haircuts on principal."

The hryvnia fell 6.7 percent against the dollar on Monday, according to central bank data, adding to over 40 percent losses since it was freed from its peg on February 5.

Sovereign bonds now trade around 40 cents in the dollar, with the issue maturing 2017 down almost 3 cents to 41.5 cents, while 2022 and 2023 issues also fell almost 2 cents, according to Trade web.

The 2017 bond has fallen 12 cents so far this month.

Ukraine's yield spreads versus US Treasuries rose above 4000 bps for the first time, the highest on the EMBI Global index. Venezuela, the other credit seen likely to default, trades with a 2,700 bps spread.

Standard Bank analyst Tim Ash noted Ukraine's budget was based on a 21.7 hryvnia per dollar rate.

"Such an extreme exchange rate move risks payments problems, a deeper recession, bigger budget imbalances, bigger losses in banks, and much lower dollar GDP - hence the big drops in the price of dollar bonds," Ash told clients.

Russian markets were shut, but bonds and the rouble fell in offshore trading, with the currency down 4 percent to one-week lows.

Moody's has cut Russia to Ba1 from Baa3, following Standard & Poor's which relegated it to junk last month. A junk rating makes it costlier to borrow and is likely to accelerate capital outflows from conservative asset managers.

Its 2030 bond fell 1.1 cent to 106.5, the 2043 issue fell 2.5 cents and other bonds shed around a cent.

Hauner said the Moody's decision was not unexpected but it had come earlier than expected and after a mini-rally caused by oil prices rising off lows.

"The other thing is just the psychology of it. There has been short-covering happening and now some people will take chips off the table," he added.

As a junk credit Russia faces ejection from Barclays' Global Aggregate index where its total weight is estimated at $140 billion. JP Morgan will also remove Russia from the investment-grade portion of its GBI-EM index for emerging currency bonds, a portion to which $5-7 billion is benchmarked.

Copyright Reuters, 2015

]]> (Nasir Ahmed)EuropeMon, 23 Feb 2015 14:03:43 +0000
Russia 5-yr CDS rise to one-week high after Moody's cut to junk Russian debt insurance costs rose on Monday in the credit default swaps (CDS) market after Moody's became the second ratings agency to cut the country's sovereign rating to junk.

Data from Market showed five-year CDS raised 31 basis points versus Friday's close to a one-week high of 524 bps.

Moody's downgraded Russia's sovereign rating to Ba1 from Baa3, citing the impact from the Ukraine crisis as well as the steep fall in oil prices and the rouble. Standard and Poor's earlier this year also downgraded Russia to junk.

Russian dollar bonds also fell across the curve on Monday and the rouble shed more than 3 percent against the dollar.

Copyright Reuters, 2015

]]> (Nasir Ahmed)EuropeMon, 23 Feb 2015 10:55:52 +0000
Bund futures fall, Italian BTP futures rise after Greek deal German Bund futures fell, while BTP futures rose on Monday after Greece agreed a conditional financial rescue with Europe.

The deal, subject to Greece passing reform promises and reached after its new government made big concessions, eases concerns about Athens leaving the euro zone, something investors had perceived as a nagging outside risk.

Bund futures fell 29 ticks to 158.53, reflecting reduced appetite for low-yielding assets perceived as safe. Italian BTP futures raised 34 ticks to 138.97.

Copyright Reuters, 2015

]]> (Nasir Ahmed)EuropeMon, 23 Feb 2015 08:31:31 +0000
Greek yields fall before meeting on debt deal Greek bond yields pushed lower on Friday on hopes euro zone finance ministers will eventually agree a deal on a loan agreement that will help Greece avoid bankruptcy. Greece sought an extension of its current loan agreement on Thursday, but it rejects any deal that would maintain previously agreed austerity measures.

That has put it on a collision course with Germany.

Germany said Greece's proposal was "not a substantial solution" because it did not commit Athens to meet the conditions of its 240 billion-euro international bailout.

However, German European Commission member Guenther Oettinger raised expectations for a breakthrough when he said Greece and its creditors might need another meeting of euro zone leaders next week to reach a deal, after a meeting of finance ministers scheduled for later on Friday.

Investors shrugged off a report by the German news magazine Spiegel that the European Central Bank is preparing for Greece's exit from the euro zone. Greek bonds and stocks remained firm.

"The expectation that there will be an agreement eventually is providing relief to Greece, and it also makes sense to have peripheral markets outperforming as well," said Cyril Regnat, a strategist at Natixis. Greek three-year yields dropped 74 basis points to 16.39 percent, pulling further away from highs above 22 percent struck last week. Ten-year equivalents were 20 bps lower at 10.04 percent.


The stakes are high for Greece. It is burning through its cash reserves, and its bailout expires Feb. 28. Over 1 billion euros fled Greek banks in the past two days on fears the country will be forced out of the euro zone. But for many investors, Grexit remains an outside risk.

"It's my own view that it won't happen and that they will find a compromise," said Dickie Hodges, fund manager at Nomura Asset Managers.

"Regardless of what (German Chancellor Angela) Merkel might suggest that they could handle a Grexit from the European currency union, I think it would be exceptionally difficult." Other peripheral euro zone bonds gained as well.

They have largely been insulated from spillover from Greece by the European Central Bank's sovereign bond-buying programme, which starts next month.

Italian and Spanish 10-year yields were 1-2 basis points lower at 1.60 percent and 1.53 percent. Portuguese equivalents were 4 bps down at 2.23 percent.

Focus is also on Spain's credit ratings, with Moody's due to review its Baa2 grade after the European market close. Some analysts expect the agency to upgrade its rating.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui)EuropeFri, 20 Feb 2015 14:35:00 +0000
Periphery bond yields drop as Greece softens stance on bailout deal Yields on lower-rated euro zone bonds slid on Thursday after Greece asked its EU lenders for a six-month loan extension and pledged to honour all its debts, even though Germany immediately rejected its proposal.

In a document seen by Reuters, Greece appeared to have moved substantially toward the position taken by euro zone finance ministers in negotiations on Monday that ended without a deal as Athens vowed to ditch the 240-billion euro bailout programme.

The German finance ministry, however, said the Greek proposal was not a substantial solution and did not correspond to criteria which euro zone finance ministers agreed on Monday.

Euro zone finance ministers will meet on Friday afternoon in Brussels to consider the request, the chairman of their Eurogroup, Jeroen Dijsselbloem, said in a tweet, lifting market expectations of a breakthrough despite the German stance.

"This is the compromise that everyone had hoped will come out of this. It seems on the Greek side, their demands are not unreasonable ... and we should now get a definitive agreement soon," said Lyn Graham-Taylor, a rates strategist at Rabobank.

Greek three-year yields were down 60 basis points at at 17.11 percent, having fallen more than a percentage point earlier, and 10-year yields were 22 bps lower at 10.2 percent.

The yields retreated further from highs above 22 percent and 11 percent respectively, hit last week as the standoff between Greece's anti-austerity government and its EU/IMF lenders over a new debt deal rattled investors.

Optimism about an agreement saw lower-rated debt outperform German bonds. Italian, Spanish and Portuguese 10-year yields initially fell by as much as 10 bps before bouncing off the day's lows. They were trading 5-7 bps down at 1.60 , 1.55 percent and 2.27 percent respectively.


The stakes over reaching an agreement with its European partners are high for Greece, which is rapidly burning through its cash reserves and risks being forced out of the currency bloc.

The European Central Bank is also putting pressure on Athens and on Wednesday approved a smaller increase in emergency funding to Greek banks than requested.

The ECB raised the provision on Emergency Liquidity Assistance (ELA) by 3.3 billion euros, bringing the total to 68.3 billion euros, a person familiar with the ECB talks said.

The Greek central bank had requested an extension of roughly 10 billion euros, said the source. Other sources said it had sought an increase of 5 billion.

"Over the next few weeks, Greece will, therefore, need to achieve substantial progress on fleshing out the exact parameters of the programme as well as voting legislation through parliament," Deutsche Bank strategists said in a note.

"For this to materialize, agreement needs to be reached at tomorrow's Eurogroup, with another breakdown again bringing ECB liquidity provision back into immediate question."

Copyright Reuters, 2015

]]> (Imaduddin)EuropeThu, 19 Feb 2015 17:40:52 +0000
UK long-dated gilt yields track Treasuries to highest since Jan 5 British long-dated government bond yields rose to their highest level since Jan. 5 on Tuesday as U.S. Treasury yields climbed on growing expectations that the Federal Reserve could flag a possible interest rate increase as early as June.

Ten-year gilt yields rose as much as 7 basis points on the day to peak at 1.759 percent, a level last seen on Jan. 5, and 20- and 30-year yields also set similar records at 2.316 percent and 2.491 percent .

The spread of 10-year gilts over Bunds hit a three-month high of 138.7 basis points, reflecting the growing divergence in the expected paths of monetary policy for the Bank of England and the European Central Bank.

Copyright Reuters, 2015

]]> (Imaduddin)EuropeTue, 17 Feb 2015 20:41:02 +0000