Where there is the European Central Bank’s full capacity of purchasing short-term State debt, there is hope. Even the primary market has opened, although by understandably timid measures, for southern euro zone debt issuers at a sub-sovereign level like State agencies and autonomous regions. The financial City of Madrid expects this window of opportunity to expand and demand of government bonds to improve as it is already happening to banks…
By Luis Arroyo, in Madrid | Very briefly: for those who have let themselves fall for the euphoria that unfolded after the European Central Bank governor Mario Draghi reported on unlimited short-term sovereign bond purchases, I would like to remind them of what happened during the last weeks of 2011 and the beginning of 2012. Back then, the ECB introduced its long-term refinancing operations, which were meant to inject liquidity…
LONDON/MADRID | President Mariano Rajoy should manage to take this week a breath, although it will probably feel too weak. A simple look at the curve of Spain’s government debt now shows a steep upward gap between the internal rate of return of two-year bonds and the cost of the medium and long-term credit for the country. Indeed, 24-month debt paper’s IRR has tightened by more than 450 basic points…
Markets rallied on Thursday after the ECB’s highly anticipated unlimited bond-buying program to contain the euro zone debt crisis. In the U.S, an upbeat job report and news from Europe made all three Wall Street indexes close at multi-year highs. However, some experts remain skeptical on how long the euphoria will last. “I think the market generally takes these things far too seriously,” John “Jack” Bogle, Vanguard founder, told CNBC….
From stable to negative. Moody’s new rating for Europe puts the continent on notice and made some European stock markets slip on Tuesday. According to the agency, Germany, France, the UK and the Netherlands could stop fulfilling their obligations to the EU if the crisis worsens. These four countries account for about 45% of the EU’s budget revenue. “The creditworthiness of these member states is highly correlated, as they are…
LONDON | Ratings agency Fitch released on Monday the conclusions of its latest survey of the opinions of a hundred fixed-income asset managers with an estimated $7.2-trillion business volume. More than 80% of respondents work at the top 20 and 50 investing houses in Europe, so their views on the euro zone’s future are meant to be telling. And they are: fiscal integration is seen as the final station of…
LONDON | This tells investors something about the scarcity of cash and quality assets to support compensation activity outside the regulated stock markets: from Friday CME Clearing Europe, the London-based clearing house owned by CME Group, has extended the range of eligible collateral types to include gold bullion. It is supposed to make it easier for holders of financial derivative products to offload their portfolios, and so prospective buyers would be more willing to…
By Tania Suárez, in Madrid | Fernando Luque is analyst and editor for Morningstar. In a conversation with The Corner, he said that Greece will not withdraw the euro because “that possibility is no good for anybody, neither for Greece, nor for Germany.” Luque explains that there are no shortcuts to solve the Greek crisis, but that will not necessarily damage other peripheral countries such as Italy or Spain. Question.-…
Hundreds of thousands of retail investors may share an uncomfortable feeling these days, that of being trapped under their holdings of what once was commercialised as ‘patriotic bonds’. Unloading them is proving a difficult task. While most sovereign and sub-sovereign debt securities in the secondary market move millions of euros, daily trade volumes of short-term paper issued in 2011 and 2012 by Spanish regional governments rarely reach the modest figure of €50,000….
By Tania Suárez, in Madrid | Alberto Matellán is director of strategy and macroeconomics at Inverseguros SVB. In a conversation with The Corner, he said that even if Spain doesn’t formally request a bailout, “it will be necessary some kind of intervention.” However, he points out that the possible Spailout would be met via different instruments, and that there is a high probability that a bailout for Italy comes in…