The debt crisis has caused financing to become more expensive for the federal government and has weighed down interest rates for the banks, which are the most popular investors in fixed income funds.
The fixed income crisis is also affecting small fund managers, especially those who decided to invest in fondtesoros, a kind of Spanish Treasury bond. "The Spanish debt crisis has shown, through treasury bonds, what we all knew but didn't want to believe: fixed income is not necessarily fixed," affirmed David Sánchez, an analyst from Inversis.
Fondtesoros are products are characterized by investing at least 70% of net assets in Spanish debt, no matter the term. While in the past this strategy has provided strong results for fund managers (when Lehman collapsed in 2008, they closed with returns near 4%), it served us an expensive bill last year. And the proof is that 65% of the treasury bonds accumulated losses in the last 12 months.
This figure might seem small if we keep in mind that the price of all the assets in which they are invested have fallen during the last year, which corresponds to an increase in their profitability and, therefore, in capital losses for those that bought the shares a year ago. For example, the yield on the Spanish 10-year bond has passed 4.21% over a year ago and is at 6.03% at this time, which equals an increase of 45%. The Spanish risk premium has shot up to 340 basis points with respect to the German bond. The risk premium was at 137 basis points a year ago. Yields on 2-year bonds have risen from 1.90% to 4.21%.
