Bond market gives eurozone brief respite

LISBON, Portugal (AP) — Europe won some further modest respite from its debt crisis Wednesday as Germany and Portugal became the latest countries to borrow with relative ease ahead of a hazard-filled few weeks for the 17-nation eurozone.

But news that a major Italian bank had to offer an unexpectedly large discount to raise new capital and strengthen its finances was a reminder of how the crisis is weighing on banks, as well as governments.

Germany, the biggest contributor in Europe’s bailouts, managed to sell €4.06 billion ($5.3 billion) in its benchmark ten-year bonds Wednesday at an average yield of 1.93 percent, down on the previous 1.98 percent it had to pay. But demand barely covered the bonds on offer. And Portugal, which was bailed out last April after being locked out of international markets, paid a markedly lower interest rate to borrow €1 billion ($1.3 billion) in three-month treasury bills.

Though Germany and Portugal enjoyed modest successes, Italian bank UniCredit saw its share price tumble by over 10 percent on the news it was selling new shares at a large 69 percent discount to Tuesday’s closing price. UniCredit is trying to raise €7.5 billion ($9.8 billion) to meet new European requirements for banks to thicken their financial cushions against possible losses.

Posted by publisher on Jan 4 2012. Filed under Off-the-wire, World news. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.