France, Spain Sell

Arthi Gupta
15 Mar, 2012
New York City

European indexes gained after France and Spain sold bonds today at lower borrowing costs. Employment in the euro area fell in the fourth quarter and the SNB held rates.

[R]3:00 PM Frankfurt – European indexes gained after France and Spain sold bonds today at lower borrowing costs. Employment in the euro area fell in the fourth quarter and the SNB held rates.[/R]

European indexes edged slightly higher after bond auctions by France and Spain. The International Monetary Fund is set to approve €28 billion, its share of the €130 billion second bailout package for Greece today.

Fitch Ratings downgraded the UK''s credit rating outlook to ''negative'' from ''stable'', indicating a slightly greater than 50% chance of a downgrade over a two-year horizon.

But the agency affirmed the UK’s long-term foreign currency issuer default rating at AAA.

In Paris trading, the CAC-40 Index rose 0.72 or 0.02% to 3,565.66 and in Frankfurt the DAX Index edged higher 21.05 or 0.3% to 7,101.04.

French, Spanish Bond Auctions

The French government raised €8.461 billion from the auction of medium term treasury notes today at lower borrowing costs.

The debt management agency AFT sold €3.26 billion benchmark 5-year notes at an average yield of 1.78% compared to the average yield of 1.93% on notes issued on February 16. The bid-to-cover ratio was 1.98 compared to 1.99 times at the prior issue.

France sold €2.106 billion notes maturing on April 2014 at an average yield of 0.7% and the bid-to-cover ratio was 2.39.

The country also auctioned €1.93 billion from securities maturing on October 2014, at an average yield of 0.86% and sold €1.165 billion of notes maturing on February 2016 at a yield of 1.4%.

Spain raised €3 billion today from an auction today and the borrowing cost fell slightly.

The yield on the 4.4% January 2015 fell to 2.440% from 2.966% at the prior auction. Demand rose to 4.96 from 4.4 at the previous issue.

Yields on the 3.25% April 2016 dropped to 3.374% from 3.748%. The bid-to-cover ratio for 2016 bonds rose to 4.13 from 2.2.

The yield on the 4.10% July 2018 bonds was at 4.193%. The bid-to-cover ratio was 2.9.

Euro-zone Employment Drops

The number of persons employed decreased 0.2% in the euro area and 0.1% in the EU27 in the fourth quarter of 2011 compared with the previous quarter, according to Eurostat, the statistics office of the European Union.

In the third quarter of 2011, employment decreased 0.2% in both zones.

Construction recorded the largest fall in employment and the largest increase was in real estate activities.

Compared with the same quarter a year ago, employment fell 0.2% in the euro area and remained stable in the larger EU27 in the fourth quarter of 2011.

Eurostat estimates that, in the fourth quarter of 2011, 223.0 million men and women were employed in the EU27, of which 146.4 million in the euro area.

SNB Holds Rates

The Swiss National Bank decided to maintain the minimum exchange rate of the Swiss franc at 1.20 a euro and also retained the key interest rate close to zero.

Gainers & Losers

Deutsche Lufthansa AG fell 2% to €10.30 after the German aviation group stated fiscal year 2011 revenues grew 8.6% to €28.73 billion from €26.46 billion in the prior year. Net loss for the year was €13 million compared to a profit of €1.13 billion in the previous year.

Fiat S.p.A. rose 0.04% to €4.82 after the Italian car maker said a transport strike in Italy led to a production loss of about 20,000 units.

HeidelbergCement AG soared 3.4% to €43.85 after the producer of cement, concrete and other building materials said 2011 revenue increased 10% to €12.902 billion from €11.762 billion s last year.

Net profit for the year rose 5% to €534 million compared with €511 million the prior year, despite extraordinary charges of €138 million. Full-year earnings per share improved to €1.86 from €1.83 in 2010.

Hennes & Mauritz AB climbed 1.9% to SEK 248.40 after the Swedish apparel retailer said its total sales for February including VAT in local currencies increased 13% compared to the same month the previous year. Sales in comparable units increased 2%.

Sales including VAT in the first quarter ending in February were SEK 32,503 million.

Home Retail Group Plc dipped 0.2% to €114.80 after the UK-based home and general merchandise retailer said its second-half like-for-like sales fell 8.7% at Argos and declined 3.7% at Homebase.

K+S AG soared 6.2% to €38.78 after the German fertilizer firm reported fourth quarter revenues advanced 0.8% to €1.3 billion from €1.29 billion in the year-ago quarter. Adjusted group earnings from continued operations for the quarter rose 3.1% to €153.3 million or 80 cents per share from €148.7 million or 78 cents per share in the prior year.

For the full-year 2011, revenues rose 11% to €5.2 billion. Adjusted group earnings from continued operations for the year surged about 50% to €673.6 million or €3.52 per share compared to €453.8 million or €2.37 per share the previous year.

Tesco Plc eased 0.9% to 321.95 pence after the international retailer said Richard Brasher, the chief executive officer of its UK operations, will step down from the board immediately.