French Debt Downgraded, Spain Raises

Arthi Gupta
20 Nov, 2012
New York City

The European indexes traded sideways after French debt ratings were cut. Spain raised

[R]1:30 PM Frankfurt – The European indexes traded sideways after French debt ratings were cut. Spain raised €4.9 billion from a short-term debt auction today. UK mortgage lending rose and German producer prices eased in October. Terra Firma agreed to acquire Annington for £3.2 billion.[/R]

The European indexes traded sideways after Moody''s downgraded France''s government bond rating.

Investors look ahead to the meeting of the euro zone finance ministers in Brussels today to debate whether Greece is eligible for the next tranche of the bailout fund.

The UK gross mortgage lending rose to an 11-month high and German producer prices eased in October.

French Rating Cut

Moody''s Investors Service downgraded France''s government bond rating by one notch to Aa1 from Aaa. The outlook remains negative.

The agency said France''s fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term due to subdued domestic and external demand, and in the longer term due to the structural rigidities of its labor, goods and service markets.

In Paris trading, the CAC-40 Index declined 4.45 or 0.1% to 3,435.13 and in Frankfurt the DAX Index edged higher 12.69 or 0.2% to 7,136.80.

The yields on Spain’s benchmark rose one basis point to 5.91%. Italian 10-year yields rose two basis points to 4.868%.

Spanish Bond Auction

Spain raised €4.9 billion from the sale of 12-month and 18-month treasury bills today.

The Spanish treasury sold €4.225 billion 12-month bills at an average yield of 2.797% compared with 2.823% last time. The bid-to-cover ratio fell to 2.1 from 2.7 at the prior auction.

The country also sold €713 million 18-month bills at an average yield of 3.034% compared to an average yield of 3.022% in the last auction. The bid-to-cover ratio for the 18-month bills climbed to 5.7 from 3.

UK Mortgage Lending Rises

Mortgage lending in the United Kingdom increased 4% annually to £12.9 billion in October, data released by the Council of Mortgage Lenders showed today.

German Producer Prices Ease

Germany''s producer price index eased 1.5% annually in October, after gaining 1.7% in September, data released by statistics office Destatis showed today.

On a monthly basis, producer prices remained unchanged in October, following a 0.3% rise in September.

Terra Firma Acquires Annington

Terra Firma Capital Partners Ltd., the UK private equity firm agreed to acquire Annington Homes from Nomura International plc. The acquisition is due to complete by the end of 2012.

The enterprise value is £3.2 billion, comprised of £1 billion in the form of new equity from a Terra Firma specialist fund and of new debt financing and assumed existing debt of £2.2 billion.

Glencore Gets Shareholders Approval for Xstrata Merger

Glencore International Plc, the Swiss commodities trader said 99.42% of its shareholders voted to approve the merger deal with miner Xstrata Plc.