Italy Raises

Arthi Gupta
24 Feb, 2012
New York City

The European indexes gained on strong earnings. The Greek parliament approved the debt swap deal with its private creditors. Italy sold

[R]1:00 PM Frankfurt – The European indexes gained on strong earnings. The Greek parliament approved the debt swap deal with its private creditors. Italy sold €3 billion of zero-coupon bonds at lower yields. BASF quarterly sales and net rose.[/R]

European markets climbed after better-than-estimated corporate earnings. Upbeat global economic data also lifted investor sentiment in early trading.

Italy successfully sold €3 billion of zero-coupon bonds and €1.5 billion of inflation-linked bonds today.

The Greek Parliament approved the debt swap deal with its private creditors, a pre-requisite for receiving the second bailout package worth €130 billion from the European Union, International Monetary Fund, and the European Central Bank.

The final agreement increased the loss to private bond holders to 53.5% of face value or the equivalent to 75% of overall loss.

Greece will lower its debt to 120.5% of its gross domestic product by 2020, from the current debt of nearly 160% largely with the help of lower interest rate on the newly exchanged bonds in which the ECB will also participate.

In Paris trading, the CAC-40 Index gained 20.59 or 0.6% to 3,467.90 and in Frankfurt the DAX Index edged higher 62.80 or 0.9% to 6,871.77.

For the week, the CAC-40 Index rose 0.8% and the DAX Index advanced 0.3%.

Italy Bond Auction

Italy sold €3 billion of zero-coupon bonds maturing on January 2014 at an average yield of 3.01% compared with 3.763% at the previous auction on January 26.

The government also auctioned €1.5 billion of inflation-linked bonds. The treasury sold €753.5 million in bonds indexed to inflation due in 2016 at a rate of 2.7% and €746.5 million in bonds indexed to inflation due in 2019 at a rate of 3.19%.

The yield on the Italian 10-year bond dropped eight basis points to 5.46%. Spain’s 10-year yield fell two basis points to 5.05%.

German Economy Shrinks

The German economy contracted 0.2% on a quarterly basis in the fourth quarter following a 0.6% expansion in the third quarter, an updated estimate from the Federal Statistics Office confirmed today.

French Confidence Strengthens

French consumer confidence gained in February, the latest survey from the statistics office Insee showed. The corresponding indicator rose to 82 in February from 81 in January.

Gainers & Losers

BASF SE rose 1.3% to €65.41 after the Germany-based chemical company said fourth quarter sales increased 10% to €18.07 billion from €16.4 billion in the year-ago period. Net income in the quarter advanced 2.7% to €1.13 billion or €1.23 per share compared with net income of €1.10 billion or €1.20 per share a year earlier.

The company proposed a dividend of €2.50 a share for 2011, up from €2.20 in 2010.

Sandvik AB climbed 0.6% to SEK 103.40 after the engineering company reached an agreement with Orchid Orthopedic Solutions to divest Sandvik Medical Solutions.

Technicolor S.A. plunged 5.4% to €2.12 after the developer of broadcasting technologies stated second-half group revenues declined 8.9% to €1.89 billion from €2.08 billion in the year-ago period. Adjusted EBITDA for the period fell 15.1% to €308 million compared to €363 million last year.

Telecom Italia S.p.A. soared 5.4% to €0.86 after the company engaged in fixed and mobile telecommunications services reported preliminary fiscal year 2011 revenues rose 8.7% to €29.96 billion from €27.57 billion a year ago. EBITDA climbed 7.3% to €12.25 billion from the prior year.

Telefonica S.A. dipped 0.1% to €12.87 after the Spanish broadband and telecommunications provider reported fourth quarter revenue fell 1.8% to €16.17 billion from €16.46 billion in the prior-year quarter.

Net income in the quarter soared 101% to €2.67 billion compared to net income of €1.33 billion last year. Basic earnings per share increased to 59 cents from 30 cents per share in the same quarter last year.