The Corner | March 10, 2015 | Markets will need to get used to the Greek conundrum, experts at Link Securities commented, that is why euro area bonds are going to look more attractive than stock in today’s session. (Picture by Álex García.)
MADRID | The Corner | The last ECB measures will apease investors who see that once again central banks are betting on the economy although this means forcing their mandates. And they had an immediate effect on the EU’s peripheral bonds: Spanish 10-year-bond yield closed at 2.05% and 5-year-bond at 0.72%, while risk premiums fell to multi-year lows. This will serve to drastically reduce the cost of financing and making it much easier for large companies to get funding. The euro’s strong devaluation against major world currencies should serve to increase the competitiveness of European producers and increase the region’s exports, analysts at Link commented on Monday.
MADRID | The Corner | Spanish biggest bank Santander announced a bond issue contingent convertible (Coco) by an amount of €2.5 billion, which will be directed exclusively to qualified investors. Another Spanish company seeking financing in the capital markets is construction firm ACS, issuing of €500 million debt, which that was forced to suspend it some weeks ago due to the Portuguese bank Espirito Santo scandal.
MADRID | The Corner | While bonds are considering a world without growth nor inflation, equities seem much more optimistic. On their Monday comment, JPMorgan analysts point out that, on a global level, monetary policies are still increasingly more expansionary in aggregate form.
MADRID | The Corner | Santander will issue contingent convertible bonds (CoCos) worth up to 1,500 million euros. In order to reach its aim, the bank will start a road show to sound out the market interest and, in case of suitable conditions, it will start the operation on Monday or Tuesday next week with the collaboration of Credit Suisse, HSBC, JP Morgan, Société Générale and UBS. This issue of CoCos will be the third that the Spanish bank carries out this year, after the issue of 1,5000 million euros in March at an interest rate of 6.25% and another one in May when it sold CoCos worth 1,500 million dollars at 6.375%.
MADRID | The Corner | The expectation that the ECB will finally announce a QE program after Draghi’s words at Jackson Hole and the confirmation that the ECB would have hired Blackrock for advice on launching a ABS program continue to nurture the Eurozone bond rally and thereby the credit one. Yesterday many bond markets in Europe returned to record lows with improvements in 10 years of 3bp (Germany), 2.5bp (Spain) and 2bp (Italy).
MADRID | The Corner | Peripheral equities and bonds have been strongly favored by Draghi’s speech last Friday at Jackson Hole with intense improvements in sovereign credits from Portugal, Spain and Italy, which have reached record lows. In particular, Spain’s 10-year bonds yields are at 2.12% under the 2.38% of comparable U.S. Treasuries and especially today the Spanish Treasury has reduced sharply the interest rates of three- and nine-months bills in an auction of € 3,500 million at historical lows, without entering in negative territory like on the secondary market. Nevertheless, UBS strategists are starting to change their bullish view on peripheral Europe basing on market and fundamental arguments.
MADRID | The Corner | In the next few days demand for Spanish bonds is expected to grow, since Spanish debt auctions will be held and European CPI data showing that prices remain very low will be released.
MADRID | The Corner | Reporting season in Europe is beginning. Over half the Stoxx600 companies that already showed results surpassed expectations. Profits grew for 70% of this businesses and the average rise was of 9%. European markets’ upward trend being less mature than American’s may point at a EuroStoxx higher appreciation potential. It gains importance as performance results keep looking up and prices context allows EZ companies to rise EBITDA margin from current 15.2% to prior years levels (above 16%).
ATHENS | By MacroPolis | After tapping markets in April for the first time in four years, Greece is considering another bond transaction, which could take place as early as next week, according to reports. The troika delegation is scheduled to return to Athens on July 9 and the country’s goal is for the operation to take place as early as possible to avoid any negative repercussions during the inspection by Greece’s lenders affecting investor interest or the yield.