London: Italy's 10-year bonds rose for an eighth week, the longest run of gains in 14 years, after demand for the securities surged as the European Central Bank provided financial institutions with a second round of three-year loans.
Spanish 10-year and two-year securities advanced for a third consecutive week after the Frankfurt-based central bank lent 800 financial institutions a greater-than-forecast €529.5 billion (Dh2.63 trillion) through its longer-term refinancing operation, or LTRO. Portuguese two-year notes fell for the first time in five weeks even after the ECB was said to buy the nation's securities. German bunds rose for a second week.
"The market thinks the LTRO is helping to ease the euro- crisis and this is contributing to a general mood of greater risk appetite," said Allan von Mehren, chief analyst at Danske Bank in Copenhagen.
Italy's 10-year yield fell 57 basis points, or 0.57 percentage point, last week to 4.91 per cent in London. The 5 per cent bond due March 2022 rose 4.285, or 42.85 euros per 1,000-euro face amount, to 101.150.
The Italian 10-year rate has declined more than 2 percentage points over the past eight weeks, in the longest streak of declines since November 1998. It touched 4.90 per cent on March 1, the lowest since August 18.
Spain's 10-year bond yield rose above Italy's for the first time since August 2011. The Iberian nation's benchmark yields dropped 15 basis points this week, while its two-year note yields fell 36 basis points to 2.25 per cent.
Tumble
Italy's two-year note yields have tumbled more than 4 percentage points to 1.75 per cent since the ECB announced its plan to offer unlimited loans for three years on December 8. Banks took 489 billion euros in the first operation later that month.
Portugal's two-year note yields fell to a seven-week low yesterday after the ECB purchased the nation's short-dated securities, according to four people with knowledge of the transactions who declined to be identified because the trades are confidential.
Two-year Portuguese rates rose 19 basis points to 13.11 per cent. Longer-dated Portuguese debt slid, with the price of 10-year bonds falling to less than 50 per cent of face value for the first time in almost a month. German 10-year bund yields declined eight basis points over the week to 1.80 per cent.
Germany is scheduled to sell €4 billion of 0.75 per cent securities maturing in 2017. The results of the auction will be published on March 7 at 10:30 a.m. London time. France and the Netherlands will sell bills on March 5 and Austria plans to auction €1.1 billion of 2022 bonds on March 6.
Italian bonds have handed investors a return of 13 per cent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Spanish bonds gained 3 per cent, Portugal's bonds have returned 2 per cent and German bunds are little changed, the indexes show.
