Robeco: Investors jump on peripheral bonds

With this hurdle taken, and the moment the ECB starts buying getting closer, investors were eager to add to positions in periphery. Portuguese bonds returned 5.5% this year, Italian bonds 4.5%, Spanish bonds 2.9% and Irish bonds 2.1%.

Greece 

The Eurogroup agreed to a 4-month bailout extension for Greece, after having approved the Greek reform list. The reforms include measures related to the fight against tax evasion and corruption and reforms on the labor market, the judicial system and the banking system. The German Bundestag on Friday voted in favor of Greece’s bailout extension with 542 votes in favor versus 32 votes against.

Italy

The EU commission approved the Italian 2015 budget. The budget deficit is projected to remain below 3%, but Italy fails to reduce its debt/GDP ratio as required by the so-called six-pack rules.

Spain

The National Statistics Institute confirmed that Spanish GDP rose by 0.7% in the fourth quarter of 2014. On an annual basis, real GDP rose by 2%, the largest year on year increase since 2008.

Issuance

This week Spain, Portugal and Italy issued a total of EUR 15bln of mainly long dated bonds. The auctions attracted large interest from investors, with all issues well oversubscribed. Both Italy and Spain have now already funded 25% of their 2015 issuance needs, while Ireland and Portugal are already above 50%.

Robeco Euro Government Bonds

We remain positive on peripheral bond markets as fundamentals are improving and the ECB has clearly shown its determination to do ‘whatever it takes’. Peripheral bonds remain attractive in this environment. The fund has a preference for longer-dated peripheral bonds. 

We increased our exposure in Portuguese bonds as we expect these to benefit most from ECB buying due to the relatively limited size of the bond market.

Das vollständige Update im pdf-Dokument