Additional support for Spanish and Portuguese bonds has come from the European Central Bank’s 2.6-trillion-euro ($2.9 trillion) debt-buying program, which guaranteed a buyer even during times of turbulence. Portugal was kept in the program after DBRS was the only rating agency that refrained from downgrading it to junk even as the country had to depend on an IMF bailout plan in 2011 to weather the crisis.

Peripheral bonds have also gained popularity with foreign buyers, particularly from Japan, for whom the yield pickup gets a boost when hedged against currency swings. Spanish 10-year bonds offer a 50-basis-point premium versus domestic bonds, while Japanese investors snapped up the most Italian securities since 2005 in June.

“The Iberian countries have made great economic progress year after year,” said Ruediger Kerth, a portfolio manager at Union Investment in Frankfurt. “The outlook remains promising.”

--With assistance from Charlotte Ryan.

This article was provided by Bloomberg News.

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