Newspaper Article

U.S. Rate Concerns Weigh on Eurobonds

This article was prepared by Chui-Ling Tam, Justin Pugsley, Geoffrey T. Smith, Nicholas Elliott, George P. Bayliss, Eric Van Zant, Dan Weeks, Allison Bisbey and Axel Bugge Of the Capital Markets Report

1994

Overview

The Fed's quarter-point increase to its target rate early last month -- its first increase in nearly five years -- sparked a steady round of losses in world bond markets. In local-currency terms for the year to March 18, U.S. Treasurys yields have lost 2.05%, Bunds retreated 1.79% and French Treasurys are off 2.62%, according to the Salomon Brothers world government bond index. U.K. gilts are the weakest performers, off 5.71%. The issue has an unusually wide reoffer yield of half a point over the three-month London interbank offered rate. The bonds were initially offered to investors at 99.44, and interest floats at 3/8 point above Libor. The notes can be redeemed at the issuer's or bondholders' option at par from March 1999. The Treuhand's 6 1/2% bonds due 2004 slid 0.61 point to 98.74, yielding 6.43%, up nine basis points, or hundredths of a percentage point. The government's 6 1/4% bonds due 2024 traded 1.06 point lower at 91.06, to yield 6.98%, up nine basis points. Among middle maturities, the 5% Treuhand notes due 1999 shed 0.19 point to 97.27, yielding 5.66%, up five basis points.

• Publisher: Dow Jones & Company Inc
• Subject: Eurobonds / Federal funding / Federal funds rate / Federal Reserve monetary policy / Futures / Government bonds / Interest rates / LIBOR / Prices / Treasuries / Yield curve