Euro-area government bonds advanced as investors speculated the European Central Bank (ECB) will expand its asset purchase program to include government securities. Spain’s 10-year yield slid as much as 5 basis points (bps) to reach 1.961%, yielding below 2% for the first time ever. 10-year bond yields in Italy, Ireland, France, and Austria also hit historic lows, extending last week’s decline after ECB President Mario Draghi strongly signaled further stimulus.
Mexico is planning to sell at least $500 million dollar-denominated bonds as soon as today with new-style collective action clauses (CACs) that preventing holders with less than 25% of the country’s debt from blocking restructuring. Following Kazakhstan and Vietnam, it will be the third emerging-market county to adopt the issuer-friendly CACs designed to insulate from Argentina risk. Mexico’s move is viewed as especially significant as it is one of the biggest emerging-market borrowers in the international bond market.