Strong demand for Portugal five year but Euro periphery still nervous

This week has seen conflicting messages for European government bond markets. Portugal took advantage of positive sentiment towards the European periphery at the start of the week with a Eu3.5bn five year deal that made bankers think again about whether the country will have to turn to the EFSF soon. Belgium was also quick out of the blocks with a Eu3bn FRN. Portugal’s deal attracted strong international interest and was twice oversubscribed. But by Wednesday morning, yields across the European periphery had widened again, highlighting the nervous backdrop. Meanwhile, SSA names were champing at the bit to get back into the dollar market after the Chinese New Year break. L-Bank, the EIB, KfW, Denmark, BNG and Council of Europe all piled in, with early reports suggesting that demand for SSA bonds is still strong. France is in the market with a new linker alongside its agency, Cades, which is looking to issue a euro conventional. Network Rail also announced its return to sterling for the first time in three years. Read EuroWeek on Friday for the most in-depth analysis of these deals and to find out where Europe’s periphery is headed.