Peripheral bond spreads widen, supply pressure mounts

LONDON, Jan 10 (BestGrowthStock) – The premium investors demand to
hold Spanish and Italian government bonds rather than German
benchmarks rose on Monday as a week of heavy bond supply raised
tension in the euro zone’s higher yielding bond markets.

Spain and Italy will sell debt later this week with tension
running high among the region’s peripheral countries as
political pressure mounts on Portugal to seek financial aid from
the European Union and International Monetary Fund.

“The sovereign debt crisis is increasingly coming back into
the market’s focus… there is a lot of concern among politians
over the crisis and this only fuels the market’s concerns,” said
Niels From, chief analyst at Nordea in Copenhagen.

The Spanish/German 10-year bond yield spread (ES10YT=TWEB: )
(DE10YT=TWEB: ) widened to 274 basis points from around 267 bps at
Friday’s settlement. The Italian spread (IT10YT=TWEB: ) also
widened above 200 basis points for the first time since early
December.

The equivalent Belgian spread (BE10YT=TWEB: ) widened sharply
to 140 bps as the ongoing political uncertainty in the country
kept investors on edge.

(Reporting by William James)