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Spain pays higher rates in EUR 3.75bn bond sale
Decemeber 1, 2011--Spain's borrowing costs surged Thursday as it auctioned 3.75 billion euros ($5 billion) in bonds in the midst of the eurozone debt crisis.
The Treasury managed to raise the full amount targetted but had to offer yields of more than five percent to lure interest in the auction of three-, four- and five-year government bonds, the Bank of Spain said.
Investor appetite for the bonds had been stimulated by the decision of the world's top central banks on Wednesday to pump liquidity into the financial system, said an analyst at Bankinter.
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Source: EUbusiness
Vietnam losing attraction: European business group
December 1, 2011--Vietnam is losing its attraction as a regional investment destination because of trade restrictions, new regulatory burdens and economic instability, the European Chamber of Commerce said Thursday.
"European investors' confidence in Vietnam is going down," Alain Cany, chairman of EuroCham, told reporters at the launch of an annual review of trade and investment issues in Vietnam.
While the fast-growing nation was an investment priority five years ago, businesses are finding increasingly attractive options elsewhere, such as Indonesia, which is a larger market where the business climate has recently improved.
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Source: EUbuisness
Yields On Short-Dated German Bonds Turn Negative
Yields on German bonds due in one year turn negative for first time since the advent of the euro
Investors pile into safe havens as debt crisis deepens
ECB expected to ease policy further
November 30, 2011--Yields on German bonds maturing in one year turned negative Wednesday for the first time in the history of the euro zone as risk averse investors continued to pile into assets perceived to be safe from the current debt crisis engulfing the area.
The German 4.25% January 2013 bund yielded -0.04%, according to data from Tradeweb, 12 basis points lower on the day and down from a peak yield of 1.835% made at the start of May this year.
Bid and offer yields on all bonds due in 2012 were also negative.
Investors are continuing to shun bonds issued by highly indebted euro-zone countries as politicians flounder in their attempts to stem the euro-zone debt crisis which is threatening to ensnare larger economies such as Italy and Spain. Banks are worried that their balance sheets will be contaminated by their holdings of so-called peripheral euro-zone debt.
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Source: Wall Street Journal
Eurozone inflation stuck at official 3.0% in November
November 30, 2011--The ECB, the guardian of euro price stability, wants to keep inflation below 2.0 percent but any action when bank governors meet on December 8 could be driven by concerns about a looming eurozone recession
Eurozone inflation hit 3.0 percent for the third month running in November, official data showed on Wednesday, but analysts expect the European Central Bank to slash its main rate due to the debt crisis.
Although the Eurostat data agency said inflation stood at 3.0 percent in November, economists expect the ECB to cut its benchmark rate by 0.25 points to 1.0 percent in light of the worsening crisis.
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Source: EUbusiness
Central banks act as EU sets 10-day euro crisis deadline
November 30, 2011-- The world's top central banks sprang into action Wednesday to help cash-strapped banks, while the EU acknowledged it has 10 days in which to fix a crisis threatening a global financial meltdown.
The central banks of the eurozone, the United States, Japan, Switzerland, Canada and Britain collectively announced a giant shot in the arm with "liquidity support to the global financial system."
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Source: EUbusiness
Rome Pays High Price at Bond Sale .
November 30, 2011--Italy's latest bond auction on Tuesday drew more buyers than analysts anticipated, but it didn't enable the debt-laden country to avoid paying euro-era record-high yields to get the deal done.
The auction of €7.5 billion ($10 billion) in bonds over a range of maturities saw Italy paying yields of 7.89% on three-year bonds and 7.56% on 10-year paper. Despite the record yields, the auction attracted enough demand—driven mainly by domestic buyers, analysts said—to cover the amount on offer.
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Source: Wall Street Journal
UAE downplays eurozone impact, keeps dollar peg
November 29, 2011--The United Arab Emirates on Tuesday played down the impact of the eurozone debt crisis on its economy and reiterated a pledge to maintain its currency peg to the US dollar.
"Banking and business relations with the eurozone are limited, as 20 percent of our trade is with the eurozone," the governor of the UAE central bank, Sultan Nasser al-Suwaidi, told reporters.
However, the top banker of the oil-rich Gulf state argued that the euro, whose zone faces the risk of collapse because of a snowballing debt crisis, is "a great currency."
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Source: EUbusiness
ETF securities lending comes under scrutiny for collateral risk
November 29, 2011--Wealth managers using exchange traded funds (ETFs) should be aware of securities lending and the level of counterparty risk involved, with some funds lending out as much as 90% of their securities while holding Italian and Japanese equities as collateral.
According to iShares, its FTSE 250 ETF has lent out 92% of its securities, on average, over the last year. This average figure is very close to the maximum it has had out on loan, at 95%.
Returns from this practice, which went back into the fund amounted to a net figure of 14.7 basis points.
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Source: Citywire.uk
European Commission-Economic Sentiment resumes decline
November 29, 2011--In November, the Economic Sentiment Indicator (ESI) declined by 1.0 point in the EU and by 1.1 points in the euro area, dipping to 92.8 and 93.7, respectively. The decline resulted from a broad-based deterioration in sentiment across the sectors. Confidence remained broadly unchanged only in the construction sector.
Among the largest Member States, France (-3.7) reported the biggest decrease in sentiment, followed by the Netherlands
(-1.8) and - to a lesser extent - the UK (-0.6). Sentiment was broadly unchanged in Germany (-0.1) and Spain (+0.2), while it improved in Italy (+0.8) and Poland (+0.9). The ESI remains above its long-term average only in Germany.
Confidence in industry weakened by 1.0 point in the EU and by 0.8 points in the euro area, moving below its long-term average in both regions. The deterioration was broad-based: managers were more pessimistic about their companies' past production and their export order books. They also expressed growing concerns about production expectations, particularly in the euro area where an increasing number of managers also assessed their stocks as being too large.
Employment expectations deteriorated in industry in both the EU and the euro area, while managers' selling price expectations increased in both regions.
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Source: Europa
Embattled Europe hit by credit rating warning
November 29, 2011--- Moody's warned Monday that every member of the European Union could have its credit rating downgraded without firm action to stem the eurozone crisis as the IMF denied it was in talks to bail out Italy.
Ahead of a new OECD growth forecast likely to deepen the gloom within the eurozone, Moody's said there was a real danger of "multiple defaults" by debt-ridden countries and raised the spectre of the single currency's break-up.
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Source: EUbusiness
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