Argentina

Argentina bond risk fell the most in Latin America over the past three months as quickening economic growth and a $12.9 billion debt restructuring boosted confidence in the country’s ability to pay its debt. The cost of protecting Argentine debt against non-payment for five years with credit-default swaps tumbled 0.85 percentage point, in the three months to 794. The decline is the biggest among emerging-market countries after Pakistan, whose default insurance sank 162 basis points to 498.

Greece

Greece has made remarkable progress implementing an austerity programme to tackle its debt crisis and is expected to receive the second instalment of rescue loans next month, the IMF and EU said this week. They warned, however, that the country still faces significant challenges.

Serbia

Serbia failed to sell the offered amount of six-month Treasury bills as borrowing costs rose on the same day as mounting inflation concern forced the central bank to raise its benchmark interest rate. The government raised 2.2 billion dinars (€20.8 million) of debt maturing in February 2011, compared with the 4 billion dinars offered. The average yield rose to 11.7 per cent from 11.55 per cent at a sale on 22 July. Serbia is relying on a €2.95 billion bailout loan from the IMF to stay afloat.

Spain

Spain sold the maximum amount of three-year notes at an auction and its borrowing costs fell as concern eased over the country’s ability to rein in the euro region’s third-largest budget deficit. Spain sold €3.5 billion of three-year debt at an average yield of 2.276 per cent, compared with a yield of 3.317 per cent at an auction on 10 June. That compares with a yield on the secondary market of 2.397 per cent on Wednesday. Demand was 1.9 times the amount sold, below the bid-to-cover of 2.1 times in June.

TNK – BP

Talks between Russia’s government and BP plc’s newly appointed chief executive officer Robert Dudley are stoking the best rally in 17 months for bonds of TNK-BP on expectations asset sales will help the Moscow-based affiliate. TNK-BP’s $1 billion of 7.5 per cent bonds due 2016 rose for a 14th day, the longest rally since March 2009, according to prices on Bloomberg. The yield fell to as low as 5.536 per cent, dropping for the first time below the level before the 20 April oil disaster in the Gulf of Mexico.

Turkey

Turkish bonds fell, sending yields to the highest in more than two weeks, and the lira fell after Reuters reported that Finance Minister Mehmet Simsek said the country may not approve legislation to limit the budget deficit when Parliament reconvenes in October. Simsek denied the report.

The yield on Turkey’s two-year benchmark bonds increased eight basis points to 8.43 per cent. The lira weakened to 1.5032 per dollar.

UK banks

Lloyds Banking Group and Barclays plc registered better than expected profits. LBG registered GBP 1.6 billion profits in the first six months, while Barclays made GBP 2.43 billion in the same period. Yields on LBG decreased by 40 basis points. Barclays’ bonds remained unchanged.

Data compiled by MPM Capital Investments Ltd. MPM Capital Investments Ltd is licensed to conduct Investment Services Business by the Malta Financial Services Authority. MPM can be contacted on [email protected] or 2149 3250. www.mpmci.net