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Lower-rated euro bond yields rise on Greece stalemate
February 12, 2015 / 8:52 AM / 3 years ago

Lower-rated euro bond yields rise on Greece stalemate

* Italy, Spain, Portuguese yields rise modestly

* Greek concern seen having little impact on Italy debt sale (Writes through with details, analyst comments)

By Emelia Sithole-Matarise

LONDON, Feb 12 (Reuters) - Yields on lower-rated euro zone bonds rose on Thursday after Greece and its euro zone creditors failed to agree on a way forward on a new financing deal for the country, and scheduled a new attempt for Monday.

After seven hours of talks in Brussels that ended in the early hours of Thursday, euro zone finance ministers were unable to agree even a joint statement on the next steps.

Although the market was not expecting an agreement to be reached, the lack of a joint statement was seen by some analysts as signalling that negotiations could be more protracted than thought.

“It was a disappointing outcome, not because they failed to agree but that they couldn’t even agree on a small basis on which they could negotiate in the following days to smooth the way to a meeting on Monday,” said Mathias van der Jeugt, a strategist at KBC Securities.

“So they have to start from scratch on Monday ... and in the run-up uncertainty should remain and keep Bunds bid and peripheral spreads under pressure though modestly.”

Italian, Spanish and Portuguese bond yields were all up 2 basis points at 1.69 percent, 1.65 percent and 2.58 percent respectively.

Greek equivalents were flat just after trading in the bonds opened at 0830 GMT.

Concerns about Greece were seen having little impact on a debt sale in Rome later in the day as contagion to other peripheral euro zone countries is seen as being contained for now by the European Central Bank’s bond buying programme.

Italy will auction three-, seven- and 15-year bonds. Peripheral countries have so far met solid demand at bond sales in the run-up to the ECB programme as investors look to the lower-rated paper to maximise returns as yields on higher-rated bonds dwindle.

Yields on German 10-year bonds, the euro zone market’s safe haven, were last 2 bps lower at 0.34 percent. (editing by John Stonestreet)

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