Debt officials weigh up options

Officials from the Public Debt Management Agency (PDMA) are scheduled to meet with their European Union peers in Brussels tomorrow as securities experts describe Greece’s widening bond yields as excessive. Sources said the debt officials will gather as part of their regular contacts that take place about twice a year, after which their conclusions are forwarded to Ecofin. Among the issues to top the agenda will be borrowing options available to member states aimed at meeting their financing needs in a market where the supply of government paper has been increasing. The joint issuance of a single European bond may be broached, although a number of market experts believe the chances of this idea taking off are very limited. The difference in yields between 10-year Greek and German government bonds narrowed 14 basis points to 283 basis points yesterday, the first reduction since the start of last week. BlackRock Inc, the biggest money manager traded in the US, said it had started buying Greek, Spanish and Italian government bonds after yield spreads widened to the most in a decade. «You have got to ask yourself at what point this becomes ridiculous,» Scott Thiel, head of European fixed income at BlackRock in London, which manages 1.3 trillion dollars, told Bloomberg in an interview. The spread is «too high if you step back and take a deep breath,» Thiel added. Meanwhile, JPMorgan Chase & Co said yesterday investors should sell protection on Greece defaulting on its debt. «The widening is overdone, given the high likelihood of a bailout even if a debt crisis occurs,» analysts including Oavan Wadha in London wrote in a research note. Bunds also slipped on concern that planned sales of euro-region debt will outstrip demand. Governments, including the Netherlands and Belgium, will sell 13 billion euros of debt this week, while the US Treasury will auction $78 billion in notes.

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