Strong demand for Network Rail's new sterling bond led to the deal being increased in size on Tuesday, while in the secondary market auto and telecoms bonds were ticking higher, in line with positive stock markets.
The FTSE Euro Corporate Bond Index showed investment-grade corporate bonds in euros yielding an average 64.0 basis points more than similarly dated government bonds at 1606 GMT, 0.5 basis points more on the day.
"We had a reasonably weak start, but are now around two to three (basis points) better on the day. We are trading in line with stocks until we see more end account buying," said one telecoms bond trader in London.
The Dow Jones share index gained 0.8 percent and in London the FTSE-100 index ticked up 0.2 percent, as buyers returned to the markets after an erosion of investor confidence following Thursday's bomb explosions in Madrid.
The death toll from the blasts on commuter trains rose to 201 while Spanish police probed possible links between al Qaeda and the five men they were hunting for the bombing.
Auto bonds erased some of the recent sessions' losses, gaining around five basis points for the day, with US car makers leading the pack of sector gainers.
"We are still about 30 wider than this time last week. Nobody really cares at the moment - (there is) no real money. It's just hedge funds knocking it around, and risk aversion is growing," said one trader in London.
Ford's 5.75 percent bond due in January 2009 was about five basis points tighter at 210 basis points over government securities, he said. That compared with as wide as 221 on Tuesday morning.
General Motors' 8.375 percent euro bond due 2033 was also bid around five basis points tighter at 258 basis points over government debt. Also telecoms bonds inched higher.
A trader said France Telecom's 8.125 percent bond due in January 2033 was bid at 117 basis points by around 1515 GMT, two basis points tighter from the levels it opened at.
British rail operator Network Rail stole investors' attention with its five-year fixed rate sterling bond which it increased to 2.25 billion pounds from 1.5 billion earlier following strong demand, according to an investor.
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