MADRID | By Luis Arroyo | What good does it do a falling debt if nominal GDP is increasing? According to the Real World Economy in Greece, the households’ debt went as shown in the chart. That is, the nominal value of the existing debt has dropped, but it has increased in relation to the income or the GDP with which it is paid. And this, ladies and gentlemen, is the best expression of the Debt Deflation concept.
MADRID | By Francisco López | It is not the first time economists, analysts and authorities recently talk about a possible bubble in the debt markets. But the latest, strong drops in peripheral bonds, in all-time minimums, have prompted alarms: there is too much euphoria and fixed-income market’s last moves doesn’t make sense.
BEIJING | By Andy Xie via Caixin | Stimulus proposals won’t transform the economy in China, but spending on industrial research, building megacities and globalizing the white collar labor force will.
MADRID | By Luis Arroyo | Despite Italy’s PM Matteo Renzi is the only one fighting the hard EU economic line, Italian public debt reaches 135% of GDP. The country is required by the fiscal compact to return to 60% in 20 years, which would involve perpetual austerity for an entire generation at least. However, the problem does not only affect Italy but all the European Southern countries.
MADRID | By The Corner | As the Spanish sovereign bond is at minimums (2.8%) and the volume of debt has attained maximums (98%), Bankinter analysts point that low rates along with the large volume of issuances make European fixed income highly sensitivity to the risk premium ups and downs. High yield European firms are placing their bonds at historical minimum of 3.73%, when the average of the last 15 years is 10.19%. One of the risks the ECB is highlighting is the return of financial instruments that boosted banks’ leverage and resulted in the 2007 economic downturn.
MADRID | By Jaime Santisteban | Spanish Treasury broke a new record on Thursday amid the ECB’s easing hopes. “Spanish bonds reduced spread vs. the equivalent German benchmark almost 20 points in just a couple of days. Stock markets are moving forward without a clear direction, although uncertainty is smaller than in public debt markets” The Corner senior analyst Francisco López explains.
MADRID | By Jaime Santisteban | Investors looking for a safe heaven who bet on peripheral debt and stocks have seen their profits jump. “Holding Greek 10-year bonds has brought 20% profitability in just 4 months. Portuguese debt is also to highlight. Spanish 10-year bonds (over 6% profitability) are trading at a higher yield than the stock market index,” ATL Capital Strategy Director Marta Díaz-Bajo explains for The Corner.
MADRID| By Julia Pastor | Spain rocked in debt markets on Tuesday, raising more than €40bn in public and corporate bonds, something that will hopefully underpin the excellent moment of peripheral sovereign debt. In fact, Italy announced a future issuance of 30-year syndicated bonds following the Spanish lead. International investors bought 73% of the Spanish indexed-inflation bonds and 90% and 83% of Telefonica and Bankia’s securities, respectively.
ATHENS | By Macropolis | Greece is due to raise the subject of further debt relief at Monday’s Eurogroup but with the official sector poised to take a hit this time as opposed to the Private Sector Involvement (PSI) of early 2012. Monday’s is the first meeting of eurozone finance ministers since Eurorstat ratified Greece’s 2013 primary surplus and the last before European Parliament (EP) elections will be held in Brussels today.
MADRID | By Julia Pastor | Spanish public Treasury will have its weekly appointment with investors on Thursday. This time the country will issue bonds with maturities of 5, 10 and 12 years, respectively. There would be nothing unusual about it if international investors’ appetite for the Spanish sovereign debt were usual. However, interests in national treasuries currently reach levels of the 90’s when, before euro’s introduction, those bought Spain’s debt during seven quarters without a break. The institution even considers the possibility of creating 50 years bonds. At this moment, the Spanish 10 years bonds yield under 3.25%. As the summer comes the benchmark debt could stand at around 3%.