German Sovereign

Germany, Italy and France started off a busy week of auctions on Monday with €18.87bn worth of short term debt auctions. Investors maintained the eurozone divide between periphery and core, with yields edging up in Italy and down in Germany, and bankers expect this to trend to continue throughout the summer.

The State of Saxony-Anhalt printed its first sterling bond since 2001 on Tuesday. But Bankers are divided on the future of sterling issuance for German states.

Spain sold over €7bn of bills on Tuesday between three and seven months in maturity while its 10 year yields moved north of 7.5%. Meanwhile, Moody’s shifted the outlook on Germany’s triple-A rating to negative.

German states took advantage of high demand from the country’s institutional investors to print a series of long dated floating rate notes this week. The investors are on the hunt for safe assets which pay some yield.

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.

Several SSA credits in core Europe launched sterling bonds on Wednesday, taking advantage of improved investor sentiment in recent weeks and a window ahead of the Bank of England rate announcement on Thursday and non-farm payrolls the day after.

Federal State of Saxony-Anhalt has printed its highest annual volume of privately placed medium term notes since 2008, as investors increasingly favour the format over Schuldscheine, said dealers.

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.

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.

Land NRW closed books for a Eu1bn 10 year benchmark on Thursday morning with around Eu1.2bn of orders.