Spanish yields hit new lows as ECB officials discuss QE details

[LONDON] Spanish bond yields fell to new record lows on Friday, with traders citing a Reuters report saying European Central Bank (ECB) officials were considering ways to ensure weak countries that stand to gain most from money printing bear more of the risk and cost.

Officials, who spoke on condition of anonymity, have told Reuters that the ECB could require central banks in countries such as Greece or Portugal to set aside extra money or provisions to cover potential losses from any bond-buying, reflecting the riskiness of their bonds.

"In so far as it shows the very detail of QE is being discussed... it should be read as positive," said Richard McGuire, senior fixed income strategist at Rabobank. "It may be a watered-down form of QE but from a markets perspective, we would rather have an imperfect QE now than perfect QE much later."

Spanish 10-year yields fell to a new record low of 1.72 per cent. Other peripheral yields also fell, while the euro edged towards a 28-month low against the US dollar and was last trading at US$1.22575, down a quarter of a per cent on the day.

REUTERS