Is that the margins of increase are infinite

Since the announcement of the megaplan of European rescue coupled with the decision of the European Central Bank (ECB) to buy debt of State, the evolution of the rates is contrasted in the euro area. Academe at the Bundesbank, opposed to the purchases of Greek borrowings, they are the winners of the measures decided on May 9. Indeed, since that date, the performance of the titles in 10 years from 12.4 to 8.09. Because the ECB has concentrated its fire on Greek bonds: according to the information of the German newspaper "Der Spiegel", it would have acquired no less than 25 billion euros of Greek titles in total, late last week, about EUR 35 billion for all of its operations.

Encouraged by the relaxation of Greek rates and the fact that the country is a little out of the field of concern to investors, the Government of George Papandreou plans even to return markets here in the summer, with a program of short term debt. "The Greece example could be back on arrival at maturity of 13 weeks papers, on 23 July, says Jean-François Robin, at Natixis. It would be a very encouraging signal.

Appeasement is also sensitive on the Portugal and the Ireland, the other two countries targeted by the francfortois Institute of emission. The rate to 10-year Portuguese retreated 6,28 May 7 5.02 yesterday, of the Ireland from 5.85 to 5.02. This improvement also reflected on the market of CDS (credit default swaps"): the Portugal dropped to 332 points, the Ireland at 257. For its part, the cost of a protection on Greek debt declined 938 basis at 723 points points.

The table is however more worrying to Spanish and Italian borrowing. Yesterday, rates to 10 years in the two States were even of the annual summits, to 4.50 and 4.27 respectively - 4.43 and 4.26 on May 7. "Tension on the Spain can be explained by the recent turmoil in the banking sector of the country and the lowering of the note of Fitch, advance Padhraic Garvey, P.Eng." The underperformance of the Italy is a little more concern, with a risk premium from the Germany above the level of before the rescue plan. "Yesterday, the differential of 10 years with the Bund rate was 1.6. Moreover, the risk associated with the Italy, measured by the CDS, evolves on its highest historical.

New emissions

The strategist of ING believes that the deficit of trust which the Italy object is not justified. "There is no reason that the country suffer a degradation of his note and, moreover, was not the intention of the far rating agencies." The Italian debt is partly protected by its high liquidity.

Investors will be careful today to the communications of the Italian Treasury. "We expect the announcement of an issue of bonds to five years and possibly long term bonds at auction on June 11, said Ciaran O'Hagan, in Société Générale.". But it would be very daring on the part of the Italy to sell securities to 30 years. "The country - to lift approximately 240 billion euros this yearshould be the largest issuer of the euro area in June, according to analysts of Credit Agricole, which build on a total of 21.5 billion euros of Italian emissions this month. The high level of refunds should, however, facilitate the absorption of these papers, since investors will recover the cash.

The current trend in the European bond market is to increase the share of domestic investors from foreign buyers. Is that the margins of increase are infinite. To relieve the Spain and the Italy, it is not excluded to see the European Central Bank diversify its purchases in the secondary market for these two countries.