German government bonds declined after European Union finance ministers meeting in Brussels eased the terms on emergency aid for Greece, damping demand for the region’s safest assets.
Ten-year yields climbed to a three-week high after the ministers lowered the rates on bailout loans, suspended interest payments for a decade, gave Greece more time to repay and engineered a Greek bond buyback. The country was also cleared to receive a 34.4 billion-euro ($44.7 billion) loan installment in December. Spain plans to sell as much as 4 billion euros of bills on Tuesday, while Italy will auction zero-coupon two-year notes as well as inflation-linked bonds due in 2019 and 2026.
German 10-year yields rose five basis points, or 0.05 percentage point, to 1.46 percent at 7.19 a.m. London time, after reaching 1.47 percent, the highest since November 2. The 1.5 percent bond maturing in September 2022 dropped 0.425, or 4.25 euros per 1,000-euro face amount, to 100.355. The yield on two- year notes added three basis points to 0.027 percent.
German bonds returned 3.6 percent this year through Monday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Spanish debt also gained 3.6 percent and Italian securities earned 19 percent. [Bloomberg]