Bloomberg:
Bailout Fund
After two crisis summits in four days, European Union leaders agreed on Oct. 27 to increase the bailout fund to 1 trillion euros, recapitalize banks and convince lenders to write down their holdings of Greek debt by 50 percent.
That didn’t halt a slide in Italian debt, with 10-year yields rising 15 basis points on Oct. 28 and another eight basis points today, to 6.10 percent. Spain’s 10-year rate increased three basis points to 5.54 percent, and similar-maturity Belgian yields jumped eight points to 4.38 percent.
The December Italian bond futures contract fell 0.6 percent to 97.04, widening the difference over its German equivalent to 38.22, the most in a month.
MF Global, which said on Oct. 25 it owned $6.3 billion of Italian, Spanish, Belgian, Portuguese and Irish bonds, listed total debt of $39.7 billion and assets of $41 billion in Chapter 11 papers filed today in U.S. Bankruptcy Court in Manhattan. MF Global declined 67 percent last week and its bonds started trading at distressed levels amid its disclosures of bets on European sovereign-debt.
‘Market Trauma’
“It’s an example of the market trauma,” said Charles Diebel, head of market strategy at Lloyds Bank Corporate Markets in London. “It’s broadly speaking bullish” for bunds, he said.
via Italian Bonds Slide on Contagion Concern; German Bunds Advance – Bloomberg.
