Ital­ian 10-year yield at one-week low of 3.33%

The Gulf Today - Business - - INTERNATIONAL -

LON­DON: Italy’s 10-year govern­ment bond yield fell to a one-week low on Mon­day, nar­row­ing the gap over safer Ger­man peers, on re­lief that rat­ings agency Stan­dard & Poor’s left the coun­try’s credit rat­ing un­changed.

S&P on Fri­day left Italy’s rat­ing at BBB, two notches above junk, but low­ered its out­look to neg­a­tive from stable, say­ing that the new govern­ment’s pol­icy plans were weigh­ing on the coun­try’s growth and debt prospects.

But the de­ci­sion to leave the rat­ing un­changed a week af­ter Moody’s down­graded it, bought some re­lief to a bond mar­ket hurt by the spend­ing plans of the new govern­ment in Rome, ten­sion with the Euro­pean Union and height­ened con­cern about the im­pli­ca­tions for the coun­try’s rat­ings.

In early Mon­day trade, yields on Ital­ian govern­ment bonds were down six to 16 ba­sis points across ma­tu­ri­ties.

Italy’s 10-year bond yield fell to a one-week low at 3.33 per cent, while yields on most other eu­ro­zone peers were higher on the day as a firmer tone to Euro­pean stock mar­kets took the shine off broader fixed in­come mar­kets.

The fall in Ital­ian bond yields nar­rowed the gap over top-rated Ger­man bond yields to 299 bps from around 306 bps late Fri­day.

“The rat­ings up­date was a re­lief,” Com­merzbank rates strate­gist Rainer Gun­ter­mann said.

“The un­der­ly­ing bud­get con­cern is an on­go­ing is­sue but the rat­ings risks are out of the way for the rest of the year as there’s no more sched­uled rat­ings de­ci­sions.”

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