Bonds: Investors see opportunity in pound-denominated debt

Gilts advanced even as news broke that David Cameron might be facing some unexpected opposition in Belgium to his efforts to reach a new settlement for the UK with his EU peers.

Some investors were buying pound-denominated debt issued by multinationals Petrobras, Pemex, Gazprom as a possible way of possibly benefiting should the UK shun Brexit and sterling appreciate as a result, noted Landesbank's Lutz Roehmeyer on Bloomberg TV.

Acting as a backdrop, investors piled into US bonds in the week ending on 17 February, the latest flow data from EPFR Global revealed, possibly as an increasing proportion sank into negative rates.

European bond funds lost $1.5bn while their US counterparts gained $6bn.

That came alongside the largest outflows from European equity funds since 2014.

German 10-year Bund yields retreated by six basis points last week to 0.20%, capping five consecutive weeks of falls - the longest such run since January 2015.

That came alongside a nine basis point drop in the yield on similarly-dated Italian government debt and a three basis point decline in debt issued by Madrid.

To take note of in the emerging market space, on Friday US District Judge Thomas Griesa ruled he would drop injunctions barring Argentina from issuing new debt or servicing restructured debt once it made full-payment to bondholders who settled by 29 February and pending a hearing from a federal appeals court.