Spanish yields hit new record high

Spain’s 10-year borrowing costs rose to a euro-era record after the nation’s credit rating was cut to one step above junk by Moody’s.
Nanjing Night Net

Italy’s yields reached the highest in almost five months as it prepared to auction 4.5 billion euros ($5.7 billion) of three-, seven- and eight-year bonds after borrowing costs climbed at a sale of 12-month bills yesterday.

German bunds rose before a report that economists said will confirm European inflation eased to the slowest pace since February 2011.

Moody’s downgraded Cyprus and lowered Spain’s rating three steps to Baa3 after the nation asked for aid to support its lenders.

‘‘The debt markets are telling us that they’re unconvinced by the bank bailout and that the next step is that the government will have to concede, capitulate, and go for a sovereign loan,’’ James Stewart, head of macro research at AX Markets, said in an interview on Bloomberg Television’s ‘‘Countdown.’’

‘‘That seems to me quite likely, and even now I think it’s moving on from Spain to Italy.’’

Spain’s 10-year yield climbed 10 basis points to 6.86 per cent in early trade and reached 6.89 per cent, the highest since before the euro was introduced in 1999. The 5.85 per cent security maturing in January 2022 fell 0.68, or 6.80 euros per 1000-euro face amount, to 93.09.

Italy’s 10-year yield rose 8 basis points to 6.29 per cent, after advancing to 6.34 per cent, the most since January 20.

German 10-year yields dropped three basis points to 1.46 per cent. The rate has climbed from a record-low 1.127 per cent on June 1.

Spanish securities have lost 5.6 per cent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German debt has returned 2.5 per cent and Italian bonds rose 5.4 per cent.

Bloomberg

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