The European Union may exempt holders of bank debt issued before 2013 from proposed write-downs, according to a person familiar with the plan.
Investor Insights: Gold and Silver Gain After Central Banks Launch Helicopters.
Exempting debt issued before 2013 is designed to prevent lenders’ funding costs from rising in the near term, said the person, who declined to be identified because discussions are meant to be private. The law would need the approval of Europe’s national governments as well as the European Parliament before it could take effect.
In order to end the need for taxpayer bailouts of failing banks, EU financial services chief Michael Barnier has promised to propose draft rules that would put buyers of long-term unsecured debt in a collapsing bank first in line to take losses.
It was a rather calm day in the markets. The SPDR Gold Shares (NYSEARCA:GLD) edged .30% lower, while the iShares Silver Trust (NYSEARCA:SLV) declined by .20% in afternoon trading. Gold miner (NYSEARCA:GDX) Newmont Mining (NYSE:NEM) fell by .19%, while Barrick Gold (NYSE:ABX) fell by .51%. Before the closing bell, silver miners (NYSEARCA:SIL) such as Hecla Mining (NYSE:HL) and Silver Wheaton (NYSE:SLW) gained .09% and .32%, respectively.
Debt auctions in France and Spain attracted solid demand and at lower yields than previously feared. Madrid’s cost of borrowing, ranging from around 5.19 to 5.54 percent on the 4-, 5-, and 6-year paper, was the highest at a government sale since before the launch of the euro, but still far below the unsustainable 7 percent threshold.
France sold 4.35 billion euros of long-term bonds, with yields on both 10- and 15-year issues declining. The 10-year yield stood at 3.18 percent, with the premium investors charge for holding its bonds over benchmark German bunds falling 93 basis points.
“Demand is stronger than a month ago, although yields are fairly elevated. It is mildly encouraging,” said Nick Stamenkovic, bond strategist with RIA Capital Markets. Just two weeks ago, Spain saw yields hit euro-era highs of 6.975 percent as it auctioned 10-year debt days ahead of a general election that swept a new center-right government into power.
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