* Peripheral yields dip amid Ukraine tensions
* Bunds sell off, confounding expectations
* Ireland, Spain mull liability management plans
LONDON, April 16 Italian and Spanish yields
dipped on Wednesday morning, offering a combination of
relatively safe and high returns that continued to attract
investors with one eye on the developing crisis in Ukraine.
Italian yields nudged back near record lows while Spanish
paper was at 8-1/2-year lows. Both are likely to benefit from
any asset purchase programme the European Central Bank might
In the latest twist in Ukraine, government forces launched
an anti-terrorist operation against separatist militia in the
"We have coined Spain and Italy the safe 'pick-up' havens...
It expresses the idea that they are no longer seen as risky
assets but rather in line with the other core euro zone bond
markets," said Michael Leister, an analyst at Commerzbank.
The countries' 10-year yields
both dipped 1 basis point, to 3.11 percent and 3.09 percent
respectively, while their Portuguese equivalents
dipped 5 bp to 3.84 percent. German Bund yields
rose 2 bps to 1.49 percent.
Foreign investors who shunned peripheral countries at the
depths of the sovereign debt crisis are now much more optimistic
about their prospects.
"At least in the case of Spain, the market is responding to
the correction of the (economic) imbalances, the reform effort
and the results in fiscal consolidation," Pablo de Ramon-Laca,
head of funding at the Spanish treasury, told Reuters on
While the Italian government's reform agenda came under fire
this week - prompting reminders from the European Commission on
its commitment to balance its budget - it has had little problem
Data from the Bank of Italy showed that foreign investors
are returning en masse, while a sale of inflation-linked bonds
to domestic retail investors will close early on Wednesday after
orders approached 10 billion euros.
Cheap market funding is allowing sovereign debt managers to
dedicate more time to managing their debt profiles, using such
things as bond switches and buy backs to sooth investor worries
about their abilities to meet hefty repayments in years ahead.
Ireland is considering offering investors the opportunity to
switch out of a 10 billion euro bond maturing in April 2016 for
a longer-term bond. It used an similar exercise late last year
to buy back over 4 billion euros of a bond maturing in January
Spain, which is the only peripheral country not to have
taken such measures in recent years, is also such options.
More than half of Spain's 914 billion euro ($1.26
trillion)debt matures within the next four years, according to
Thomson Reuters data.
(Editing by John Stonestreet)