European Bond Yields Rise; TeliaSonera in Stake Increase in Kazakhstan

Arthi Gupta
22 Dec, 2011
New York City

European markets advanced and yields rebounded a day after the ECB offered half a trillion euros at cheap rate of 1%. Italian and Spanish bonds yields increased after falling for eight days in a row. TeliaSonera raised stake in Kcell for $1.5 billion. Lufthansa agreed to sell its stake in bmi.

[R]1:00 PM Frankfurt – European markets advanced and yields rebounded a day after the ECB offered half a trillion euros at cheap rate of 1%. Italian and Spanish bonds yields increased after falling for eight days in a row. TeliaSonera raised stake in Kcell for $1.5 billion. Lufthansa agreed to sell its stake in bmi.[/R]

The European indexes advanced more than 1% a day after the central bank offered cheap financing and extended loan collateral to include smaller bank. The move was widely welcomed by investors across the region and lowered tensions in the euro zone financial system.

Banks were scheduled to receive nearly half a trillion euros today and the availability of funds also arrested the rising sovereign yields in the region for eight days to the date of the tender offer from the ECB.

However, the yields inched up again today. Italian bond yields rose 29 basis points to 6.92% and Spanish bond yields gained 10 basis points to 5.23%.

Standard & Poor''s downgraded Hungary’s sovereign credit rating to ''junk'' status with a ''negative'' outlook, citing unpredictable policy framework that is harming the economy''s medium-term growth prospects.

The Italian government led by Prime Minister Mario Monti will have a final confidence vote later today seeking approval of austerity measures that is expected to save up to €33 billion. The measures are already passed by the lower house.

In Paris trading, the CAC-40 Index gained 40.99 or 1.4% to 3,071.41 and in Frankfurt the DAX Index edged higher 69.31 or 1.2% to 5,860.64.

Euro-zone Confidence Deteriorates

Consumer confidence in the euro-zone continued to deteriorate in December, according to a report released by the European Commission on Wednesday.

The report showed that the flash estimate of the consumer confidence indicator fell to -21.2 in December from -20.4 in November.

TeliaSonera Increases Stake in Kcell

TeliaSonera AB, the Swedish telecommunications firm signed an agreement with Kazakhtelecom to acquire 49% of the shares in GSM Kazakhstan LLP, operating under the brand Kcell, for $1.519 billion.

The company also plans to sell 25% of the shares except one share in Kcell in an initial public offering in 2012.

Fintur Holdings B.V., jointly owned by TeliaSonera and Turkcell presently has a 51% stake in GSM Kazakhstan and Kazakhtelecom holds 49%.

IAG to Acquire British Midland

International Consolidated Airlines Group S.A. agreed with Germany''s Deutsche Lufthansa AG to acquire its subsidiary British Midland Limited for £172.5 million in cash.

IAG said the deal will enable customers to have access to new destinations, more convenient schedules and enhanced frequent flyer benefits.

Gainers & Losers

Andritz AG rose 2.2% to €64.91 after the Austrian plant engineering group secured a €107 million worth contract from the Egyptian Ministries of Energy and Water Resources.

Eni SpA climbed 1.7% to €15.63 after the Italian oil and gas explorer finalized the sale of 89% of the existing shares in Trans Gasleitung Austria GmbH for €710 million, of which €533 million is attributable to the transfer price of the participation and €177 million to the repayment of shareholder loans provided by Eni to TAG.

Koninklijke KPN N.V. dipped 0.2% to €8.96 after the communication services provider reached an agreement to sell its French mobile unit KPN France to Bouygues Telecom for an undisclosed consideration.

Repsol YPF SA, the Spanish oil firm rose 0.8% to €23.03 after Moody’s changed its outlook to negative from stable after the company acquired 10% of its share capital from Sacyr at a total cost of €2.6 billion.

Suedzucker AG advanced 1.8% to €24.40 after the German sugar company reported group revenues for the nine month period to November increased 12% to €5.24 billion from €4.67 billion in the prior-year period. Group operating profit surged 41% to €586 million, higher than €416 million in the prior year period.

Telefonica SA, the Spanish telecom operator increased 1.1% to €13.15 after a rating agency lowered its credit outlook to negative but kept the long-term rating at ""BBB+.""