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By Bloomberg

Foreign investors increased their holdings of euro-area sovereign debt in May as the bond rout got under way, indicating confidence in the region’s markets, according to BNP Paribas SA.

The French bank, citing European Central Bank data on Monday, said foreign investors bought a net 57.1 billion euros ($62 billion) of the debt, after two months of sales. That showed buyers outside the common currency area took advantage of higher yields to re-enter the market, it said in a note to investors.

“They seem to have considered the yield bounce-back and the widening of bond spreads as a buying opportunity,” Dominique Barbet, a senior economist at BNP Paribas in Paris, wrote in a note to investors. “This suggests confidence in the euro zone is still there. Above all, the continuation of the ECB QE program is probably perceived as supportive for the euro-zone bond market over the coming months,” he said, referring to quantitative easing.

German 10-year bonds, the euro area’s benchmark sovereign securities, fell in that month, pushing the yield up on May 7 to 0.78 percent, the highest since December. The notes advanced later in that month, as investors grew impatient over a lack of progress on a funding deal for Greece and sought haven securities.

After the negotiations on a Greek bailout turned into an agreement last week and reduced concern the turmoil could spill over to other nations, bunds continued to decline. The 10-year yield fell three basis points, or 0.03 percentage point, to 0.74 percent as of 8:36 a.m. in London on Tuesday.

Increased purchases by foreigners in May showed a reversion from “some of the diversification out of bonds into short-term paper seen in the previous two months,” Barbet said in the note.