S&P 500 in worst drop of 2012; commodities fall, Treasuries rise

Greece Swap

Societe Generale SA, France’s second-biggest bank, Assicurazioni Generali SpA and UniCredit SpA joined firms saying they would participate in Greece’s debt swap as the country threatened to compel holdouts to take part.

They join more than a dozen banks, insurers and hedge funds that said they plan to accept the deal, accounting for at least 45 billion euros ($59 billion) of bonds, based on data compiled by Bloomberg from the companies and their reports. About 206 billion euros of Greek bonds are eligible for the swap.

The Greek set a 75 percent participation rate as a threshold for proceeding with the transaction. The goal of the exchange, which runs through March 8, is to reduce by 53.5 percent the total of privately held Greek debt, helping avert an uncontrolled default that could roil markets and fuel contagion.

Greece sold 1.137 billion euros of 26-week Treasury bills today with a uniform yield of 4.8 percent with investors bidding for 2.63 times the securities offered, the debt management agency said. The European Financial Stability Facility sold 3.44 billion euros of three-month debt at an average yield of 0.0516 percent.

Default Swaps

The cost of insuring European sovereign bonds rose for a third day, with the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments climbing 9.7 basis points to 356, the highest since Jan. 18.

The yen climbed 1.8 percent against the euro and advanced 1 percent versus the dollar. The euro depreciated 0.8 percent to $1.3114. Australia’s dollar dropped 1.2 percent versus the greenback after the nation’s central bank kept interest rates unchanged and said it has scope to ease policy if needed.

The MSCI Emerging Markets Index fell 2.3 percent, taking its two-day drop to 3.6 percent. Russia’s Micex Index slid 3.9 percent, the most this year, after more than 200 people were detained in protests against Vladimir Putin’s presidential election victory yesterday. The ruble declined versus 10 of 16 major peers, tumbling 1 percent against the dollar.

“We do not expect today’s outsized declines in Russian assets to be the start of a trend,” Ilan Solot, London-based emerging markets currency strategist at Brown Brothers Harriman, wrote in a note to clients. Higher oil prices should help Russian assets, he wrote, and the ruble should benefit “in the short term from the gradual pricing out of the political risk premium and maybe even a reversal of some outflows as the country gets back to business as usual.”

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong sank 3.1 percent, the most in almost three months. The BSE India Sensitive Index slipped 1.1 percent and the FTSE/JSE Africa All Share Index fell 1.9 percent in Johannesburg as industrial metals prices declined.

Bloomberg News

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