Nov 29 (Reuters) - German Bund futures were
steady in early trade on Tuesday with markets hoping
policymakers will make some progress in tackling the region's
debt crisis which has pushed borrowing costs for some countries
to eye-watering levels.
But there was little respite for battered sovereigns and
banks with French daily La Tribune reporting that Standard &
Poor's could change France's triple-A rating outlook to negative
within days, while Moody's warned it could downgrade the
subordinated debt of 87 banks across 15 countries on concerns
that governments would be too cash-strapped to bail them out.
Meanwhile, Italy will sell between 5 and 8 billion euros of
3- and 10-year bonds, likely having to pay more than 7 percent,
after yields soared again last week.
"The Italian debt remains extremely cheap and the current
attractive yields should lead to decent demand," said Annalisa
Piazza, market economist at Newedge Strategy.
December Bund futures were 9 ticks higher at
133.97, with 10-year yields down 2 basis points at
2.235 percent.
The region's finance ministers are set to agree details of
bolstering their bailout fund (the EFSF) to try and stem
contagion in bond markets but those hoping for
more may be disappointed with a history of initiatives that have
fallen short of market expectations.
"While the effectiveness of the leveraged EFSF remains
questionable, we also doubt that the finance ministers will be
able to pull anything materially new out of the hat tonight,"
said Commerzbank strategist Benjamin Schroeder.
"Going into this and next week's summits hopes should be
kept elevated though, so we feel comfortable with a short bias
in the Bund future for now."
(Reporting by Kirsten Donovan)
