Italian Sovereign

The Republic of Italy dipped its toe back into commercial paper this week, printing its first trades of the year. It was the country’s first CP since late autumn last year.

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.

Spanish 10 year yields continued to rise on Tuesday morning as it prepared for auction on Thursday. Yields for the country hovered between 6.23% and 6.25%. Meanwhile, Italian yields rose back above 7%.

Italy successfully navigated its planned five year bond auction on Monday morning but any relief on the part of investors is tempered by scepticism over the quality of the sale. French yields rallied but that sentiment may be short-lived, said bankers, as investors targeted Spanish Bonos.

Some form of resolution to the Greek debt crisis could be imminent in a bid to stop contagion as Italian and Spanish govvies cheapened again on Monday morning and EU finance ministers met in Brussels.