Spread at 512bps. Spanish begging ECB to restart SMP: “Spanish-German Yield Spread Widens to Euro Record on Bank Funds”

via Bloomberg:

Spanish bonds fell, pushing 10-year yields to the most relative to benchmark German bunds since the euro was created, as nationalized lender Bankia group said it will seek 19 billion euros ($23.9 billion) of state support.

German 10-year yields were within three basis points of a record low, even as opinion polls showed greater support for Greece’s pro-bailout political parties. Italian bonds declined as business confidence fell more than economists forecast, dropping to the lowest level in almost three years. Italy plans to sell as much as 3.5 billion euros of zero-coupon notes due in May 2014. It will also auction inflation-linked debt.

“The weakness in Spain and Italy is primarily down to the Bankia rescue,” said Marc Ostwald, a fixed-income strategist at Monument Securities Ltd. in London. “The Greek polls offer some grounds for optimism but that’s a very short-termist view.”

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The yield on Spain’s 10-year bonds climbed 18 basis points, or 0.18 percentage point, to 6.49 percent at 9:41 a.m. London time. The 5.85 percent security maturing in January 2022 slid 1.025, or 12.50 euros per 1,000-euro face amount, to 95.445.

The Spanish-German spread expanded to 512 basis points, the most since the euro’s introduction in 1999.

Bankia (BKIA) shares fell as much as 29 percent in Madrid trading.

— Editors: Paul Dobson, Nicholas Reynolds

To contact the reporters on this story: David Goodman in London atdgoodman28@bloomberg.netKeith Jenkins in London at kjenkins3@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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