The French and Spanish government bond auctions yesterday, Thursday 8th Jan went better than the German auction the previous day. The French sold 10.5 bn Euro bonds at various maturities out to 30 years and the Spanish 5bn Euro bonds split between 3 and 5 year maturities. The French sale at the benchmark 10 year maturity was 3.6 bn Euro. Both auctions were well covered with between bids for between 1.3 to 2.0 of the bonds offered better covered than in their last auctions. Clearly investors are seeking yield, 3.46% on French bonds, 3.83% on Spanish bonds compared with 3.00% on German bonds all at 10 year maturity.
This is exactly how investors were enticed to buy mortgage backed, nominal AAA, securitized offerings from US investment banks. Although France is nominally AAA it is nothing like as good a credit as Germany. Insurance and pension funds have very short memories and would do well to consider the universal truth that increased yield only comes at the price of increased risk and decreasing liquidity.
On UKIP matters there seems to be some confusion amongst Mr Farage's spin meisters about the MEP slate in the SW region. The membership voted for:
1 Trevor Colman
2 Earl of Dartmouth
3 Gawain Towler
4 Jeff Beer
5 Eric Edmond
6 Julia Reed
Trevor has led the election steering group brilliantly. William Dartmouth and I have supported him throughout and the South West region is now in good shape for the coming European and CountyCouncil campaign. We could not however have done it without the hard dedicated work of the Lexdrum House staff. It is galling to read that Mr Farage now wants to close Lexdrum House and shift the office to London. Does he not understand how demoralising this is for people who have worked so hard? Lexdrum House is an efficient low cost operation. Shifting to London will be a distaster for UKIP and a tragedy for the Lexdrum staff. If they are really concerned for UKIP Farage's spin meisters should put this top of their priorities rather than their pitiful personal attacks on me.