EU investigating possible rigging of debt market - FT

BRUSSELS (Reuters) - European Union antitrust regulators are investigating several banks for possible rigging of the $1.5 trillion (1 trillion pound) government-sponsored bond market, the Financial Times reported on Tuesday. The European Commission has sent questionnaires focusing on the price of supra-national, sub-sovereign and agency (SSA) debt to a number of market participants as part of an early stage investigation, the paper said, without identifying the banks. The EU competition watchdog is looking into a possible cartel, it cited a person familiar with the investigation as saying. Debt issuers in this market includes the European Bank for Reconstruction and Development and regional borrowers such as Germany's Laender, with such bonds often covered by an implicit or explicit state guarantee, it said. IFR, a Thomson Reuters service, reported in January, quoting several sources, that four London-based traders of SSA debt were being investigated by the U.S. Department of Justice for possible manipulation of bond prices. The DoJ is investigating allegations that SSA traders at different banks agreed prices and shared information on certain U.S. dollar bonds in chatrooms they established for the purpose, the sources quoted by IFR said. The DoJ declined comment. The FT said the EU investigation is likely to have started at the same time as that of the U.S. Department of Justice. Commission spokesman Ricardo Cardoso declined to comment. The EU competition watchdog has handed down billion-euro fines to several banks for rigging several financial benchmarks. (Reporting by Foo Yun Chee; editing by Adrian Croft)