U.K. Downgrade Meaningless With Bondholders Indifferent - Bloomberg: "U.K. government bonds outperformed their AAA rated German counterparts in the first day of trading after Moody’s Investors Service cut Britain’s top rank, as investors downplayed the significance of the downgrade. “What Moody’s said is old news,” said Stuart Thomson, who helps oversee $109 billion at Ignis Asset Management in Glasgow, Scotland. “It is behind the curve.” Gilts rose, reducing the additional yield investors demand to hold Britain’s 10-year benchmark securities instead of German bunds by two basis points, or 0.02 percentage point, to 52 basis points at the 5 p.m. London close. Credit-default swaps on U.K. government debt fell one basis point to 48 basis points, according to data compiled by Bloomberg. The downgrade of the U.K. to Aa1 sparked a round of political sparring after Chancellor of the Exchequer George Osborne repeatedly referred to retaining the top rating as a test for his economic policy. At the same time, bondholders and economists said rating cuts are a poor indicator of fiscal health. U.S. and French yields are lower than they were when rating companies first downgraded the nations in the past two years."
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