Finnish, German Bonds Advance as Greek Leaders Struggle to Reach Debt Deal

07.02.2012 12:49

Bloomberg: Finnish bonds led gains among Europe’s top-rated government debt as Greek Prime Minister Lucas Papademos prepared to meet political leaders to discuss extra austerity needed to get a second European Union-led bailout.
Germany’s 10-year bonds rose for a second day as Greece sold 812.5 million euros ($1.1 billion) of 26-week treasury bills. Leaders of the three political parties supporting Papademos’s interim government will meet the premier today in Athens, Ta Nea reported, without citing anyone. Finland’s 10- year yield fell by the most in almost two weeks. Dutch 10-year bonds rose as the nation was due to sell at least 5 billion euros of the securities.
“The Greek negotiations are continuing at a sluggish pace, with still no agreement in sight,” said Nick Stamenkovic, a fixed-income strategist at RIA Capital Markets Ltd. in Edinburgh. “This is causing a bit of nervousness in risk markets and has helped core bond markets.”
Finland’s AAA rated 10-year yield decreased five basis points, or 0.05 percentage point, to 2.30 percent at 11:28 a.m. London time, after slipping by the most since Jan. 25. The 3.5 percent security due April 2021 gained 0.40, or 4.00 euros per 1,000-euro face amount, to 109.86.
Close Gaps
Germany’s 10-year yield dropped one basis point to 1.88 percent, while similar-maturity Dutch securities yielded 2.19 percent, from 2.21 percent yesterday.
Greek politicians are seeking to secure a 130 billion-euro rescue package from the European Union and a deal with private creditors to prevent an economic collapse as early as next month. While they have already agreed to make cuts this year equal to 1.5 percent of gross domestic product, they have yet to close gaps over measures demanded by creditors.
Volatility on Greece debt was the highest in euro-area markets today, followed by Finland, according to measures of 10- year bonds, two- and 10-year spreads and credit-default swaps.
German bonds have gained 12 percent in the past year as the European debt crisis stoked demand for safer assets, according to indexes compiled by the European Federation of Financial Analysts Societies and Bloomberg. Dutch bonds rose 11 percent, and Greek securities tumbled 65 percent, the indexes showed.
reporters on this story: Lukanyo Mnyanda in Edinburgh