Portuguese, Greek bonds advance as bank payment concern wanes

Lucy Meakin & Neal Armstrong

Portuguese government bonds advanced for a second day as investor concern diminished that missed payments by a Portuguese bank holding company would fuel a new banking crisis in the euro area’s most indebted nations.

Greek debt rose after shares in Banco Espirito Santo SA, Portugal’s second-largest bank, jumped as much as 7.1 percent. Its parent company missed some payments on commercial paper last week, helping fuel a selloff in the debt of the region’s peripheral nations. Italian and Spanish bonds advanced. Benchmark German bunds were little changed before a report economists said will show industrial production in the common- currency bloc contracted in May.

Portugal’s 10-year yield fell 10 basis points, or 0.10 percentage point, to 3.77 percent at 8:40 a.m. London time, after climbing 28 basis points last week, the biggest weekly jump since September. It surged to 4.02 percent on July 10, the highest level since May 21. The 5.65 percent security due February 2024 rose 0.83, or 8.30 euros per 1,000 euro face amount, to 114.87.

The rate on Greek 10-year debt declined five basis points to 6.21 percent, while the yield on similar-maturity Spanish bonds slipped two basis points to 2.75 percent. The German 10- year yield was at 1.21 percent.

[Bloomberg]