Draghi is bond's best friend as European yields fall to record lows

By David Goodman and Lucy Meakin

Mario Draghi has once again proved himself to be the bond market’s best friend.

A jump in government securities across the euro area sent yields to record lows on Friday, inspired by a fresh package of stimulus measures from the European Central Bank.

Spain’s 10- year rate fell the most since June 2013 as sovereign bonds from the euro area’s most-indebted nations extended a surge during ECB President Draghi’s 2 1/2-year tenure that has hauled down borrowing costs from the highest in the currency bloc’s history.

“We are happy because in our view the ECB delivered,” said Nicola Marinelli, who helps oversee about $190 million at Sturgeon Capital Ltd. in London. “This year a lot of the performance has come from peripheral investments, corporate and government bonds,” he said, describing Draghi as a “rock-star central banker.”

The ECB’s plan, which includes lower interest rates and funding for bank loans, is adding fuel to the rally in European bonds, banishing memories of the sovereign debt crisis that threatened to blow apart the currency union as recently as 2012. As well as enriching bondholders, the rally in government bonds may facilitate nations’ efforts to control their debt loads and boost the flow of cash to businesses and households.

Yields on Belgian, French, Irish, Italian and Spanish debt fell to all-time lows on Friday and Germany’s five-year rates dropped to the least since May 2013. Greece and Portugal led euro-region securities to a 6.1 percent return this year through yesterday, according to Bloomberg World Bond Indexes.

Draghi’s Package

The yield on Spanish 10-year securities, which was more than 600 basis points above the rate on similar-maturity U.K...

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