Results from Spain's bond auctions are in. The government managed to get the sales away at lower yields than last time (better value-for-money for the taxpayer). The average yield on April 2016 was 3.748% down significantly from 4.971% last time in July 2011. Overall it raised €10bn form the auction of three bonds.I predicted that both bond auctions will go better than anticipated - not because of any improvement in economic fundamentals in Spain or Italy, but because the ECB will not and cannot permit either auction to fail.
Italy got its bonds away at half the interest rate it was paying last year. The yield on Italian 12-month bills fell to 2.735%, from the near-6% yield Italy paid to sell one-year paper at a mid-December auction. It's the lowest since June 2011. Italy sold €8.5 billion euros of 12-month BOT bills and €3.5bn of bills maturing at the end of May. The 12-month sale was covered 1.5 times, versus a bid-to-cover ratio of 1.9 at the slightly smaller sale in mid-December. The 10-year yield spread between Italian and German bonds fell below 500 basis points for the first time this year.
8 comments:
Considering the current climate the Spanish and Italian bond auctions went extremely well and the Euro is holding it's value against all the odds. I wonder what skeletons would be found were the ECB to open it's books to full scrutiny. We all seem to know exactly what the Bank of England and the US Fed are doing but the ECB seems to be shrouded in secrecy. Personally I don't trust any of the figures coming out of Euro land I think they are a pack of lies designed to prop up the Euro for as long as possible.
10 minutes ago
A BNP Paribas spokesperson infers Spanish Bonds were largely bought up by 'local banks'. Mmmmm ... not sure about that. Recommended by 0 person
8 minutes ago
.............Funded by cheap loans from the ECB
Spain will today (at about 9.30am) offer up €5bn due to mature in 2015 and 2016 and Italy hopes to shift €4.75bn of five-year bonds tomorrow.
There are rumours that the Spanish auction won't be plain sailing. Talks are not going well, we hear...
10.01 It seems that Spain has done rather better at today's bond auction that was expected. It raised €9.986bn - twice its original target. Consequently the average yield for 2016 debt was lower than recent auctions at 3.748pc.
Nostradamus predicts that the euro is doomed...
Goldman Sachs said last week that with a 1% primary budget surplus and 3,5% total deficit, Italian default is basically out of the question but the yields italian bonds have are quite "attractive". It said the it was selling French and buying Italian.
Expect yields to go quite down in the next 3-4 months.
Even Irish yields are down.
But don't worry, the book of prophecies Daily Telegraph will come up with some new reason why the euro is doomed.
Anthony .. I'm "neutral" on if the Euro survives or not.
My concern is the socialists and thier pan European political experiment, and the spurious efforts to artificially sustain the Euro from thier viewpoint.
Given they will do anything' to keep the Euro.. it may well survive, albeit worth significantly less than it is now. However, my personal view of the Euro is a secondary issue, its the political fiasco that concerns me.
~Gordo
chuckles, keep on clutching those straws.
Well it's part of what M Sarkozy wanted, that's for sure. When the LTROs were done, he was praying that the money would pour into the sovereign debt.
Personally I think this very well may have happened. Remember the ECB widened the field of what it would accept as collateral. Then with the small size of the bond offering, the banks could quite easily pony up 9.8x billion to purchase with, and still leave the vast majority of the LTRO money on deposit with the ecb (which those deposits are over 460 billion now).
The ECB I doubt is upset about the deposits ( unless we look at the credit lines being frozen to business), because they also know, that with that 489Billion of LTRO money that was borrowed for 3 years, that many of the banks funding needs themselves ( over 500 billion needed this year), is already being met. That along with the fact that there are still two more LTRO offerings this year, one at the end of Feb, I don't know when the third is.
It will be interesting to see the total ECB deposits tomorrow to get a clue as to if that is indeed what has happened.
I'm not sure of the maturity of the spanish bonds, but it is feasible that under "guidance" they could have purchased the longer term ones, with a view to using them as collateral in the next LTRO.
I still can't work out if we / when all this money is going to make it down into the real economy. It does seem bank deleveraging is where it's all going.
European Commission President Jose Manuel Barroso has said the European Union executive will use its authority to ensure Hungary complies with the bloc's laws.
It comes after Hungary brought in new rules that limit the independence of the county's central bank.
We will use all our powers to make sure Hungary complies with the principle and values of the EU. I'm confident we will achieve that.
European Commission President Jose Manuel Barroso has said the European Union executive will use its authority to ensure Hungary complies with the bloc's laws.
It comes after Hungary brought in new rules that limit the independence of the county's central bank.
We will use all our powers to make sure Hungary complies with the principle and values of the EU. I'm confident we will achieve that.
European Commission President Jose Manuel Barroso has said the European Union executive will use its authority to ensure Hungary complies with the bloc's laws.
It comes after Hungary brought in new rules that limit the independence of the county's central bank.
We will use all our powers to make sure Hungary complies with the principle and values of the EU. I'm confident we will achieve that.
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