Belgian Sovereign

Belgium joined the streak of SSA issuers tapping the dollar market on Wednesday, when it printed a tightly priced $1.25bn September 2015 Reg S benchmark on Wednesday.

Portugal’s plan to muscle its way back into the capital markets via its euro medium term note (EMTN) programme has been met with derision by dealers. However, the sovereign managed to achieve its lowest six month treasury bill yields in nearly two years suggesting there may be growing appetite for the credit as yields tumble for better-rated names.

Money market funds buying European government debt facing a drought in yield should turn their attentions to non-triple-A rated commercial paper, analysts have suggested. But with a number of split-rated borrowers such as Belgium, France and now the EFSF offering negative yields in money market instruments, fund managers’ quests for yield could be hindered.

The EFSF has become the latest issuer to move into negative yields in its short dated instruments. But despite the historically low rates the rescue fund is still not regarded as a safe haven.

Standard & Poor’s placed 15 eurozone sovereigns on CreditWatch with negative implications on Monday. Six of those countries, including Austria, Germany and the Netherlands, are rated triple-A.

The positive tone to the European government bond market this week could be short lived if Europe’s leaders fail to tackle the continent’s fiscal problems at next week’s summit, warned bankers.

Belgium managed to auction €2bn of new paper on Monday morning despite a credit rating downgrade on Friday night. Some of Europe’s worst hit sovereign markets saw yields and spreads against Germany tighten on hopes that the IMF was building a rescue package for Italy and Spain.

Belgium managed to auction €2bn of new paper on Monday morning despite a downgrade on Friday night. Some of Europe’s worst hit sovereign markets saw yields and spreads against Germany tighten on hopes that the IMF was building a rescue package for Italy and Spain.

Leads Barclays Capital, BNP Paribas, HSBC and ING released guidance of 83bp to 85bp over mid-swaps on Tuesday morning. They sounded out investors at low to mid 80s level the day before.

Kingdom of Belgium announced a 15 year benchmark on Monday morning, aimed at capitalising on improved secondary trading conditions since last week.