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ECB Leaves Interest Rate Unchanged At 1%

Submitted by Tyler Durden on 06/10/2010 07:48 -0400

European Central Bank

As expected. Overnight deposit rate at 0.2% and marginal lending rate at 1.75%. EURUSD at 1.2044/5 and EURJPY at 109.80/1 early in the day.

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Thu, 06/10/2010 - 07:59 | 405556 wintermute

I usually take Robert Peston with a pinch of salt. But hat-tip to him. His latest article is a must read for those who want the big picture on eurozone funding risks:

"Well, I've taken the annual average for a country's deficit over the period 2009 to 2011 (as per the IMF's figures) and then added the maximum repayment in a single year faced by that country.

What this should show is the vulnerability to investors losing their appetite to lend - and should also identify the year of greatest susceptibility to a liquidity crisis.

The results are perhaps not quite what you would expect.

Within the European Union, Greece (predictably) comes top of the list for annual financing requirement - with the need to raise 23.2% of GDP in 2012.

Second place however may surprise you: it's Belgium, with a 19.3% financing requirement this year.

Third is Spain, with the need to raise debt equivalent to 19.2% of GDP in 2011.

Fourth: France, an 18.9 financing requirement per cent this year, because debt equivalent to 11.2% of GDP is due for repayment.

Fifth: Italy, with a refinancing requirement of 18.8% of GDP this year and not much less next year.

Sixth: Portugal, whose peak refinancing requirement would be 18.6% (in 2011).

Germany looks pretty sound on this measure, with a peak financing requirement of 15.4% next year.

But here's what I thought was extraordinary. Ireland, despite its huge current deficit, has a peak financing requirement of 14.3%, because so little of its existing debt is coming up for repayment."

Those ECB rates will be 1% or less for a long time to come.

The whole article is an excellent read:

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/06/which_governments_face_biggest.html

Thu, 06/10/2010 - 08:51 | 405624 mephisto