Prime Minister Silvio Berlusconi ’s longest-term bonds yield almost as much as Spain’s even though Italy’s deficit is less than half, a sign Europe’s debt crisis has created relative bargains for fixed-income investors.
Government bond sales in the euro region will increase by 1 billion euros ($1.27 billion) to a gross 990 billion euros in 2011 as increased redemptions outweigh improved government finances, ING Groep NV said.
German two-year note yields climbed to the highest in 10 months as banks’ plans to repay European Central Bank loans added to signs the debt crisis is abating and damped demand for the region’s safest fixed-income assets.
Spanish and Italian notes rose, leading gains in euro-area debt, on speculation banks bought the securities to use as collateral when the European Central Bank starts offering three-year loans next week.
Greece may pay a rate of about 5 percent when it sells bills this week in the nation’s first debt offering since accepting a European Union-led bailout in May, according to fixed-income strategists and investors.
Treasury 10-year note yields were six basis points from a two-month high after the German economy expanded in the second quarter at a faster pace than analysts forecast, damping demand for U.S. government debt.