European Rescue Facility Gets Moody's Lowest Pre-Bankruptcy Rating Of AAA As Europe Prepares For Next Round Of Bailouts
Earlier today, after a few prodding phone calls from European based sources to remind the rating agencies that their only purpose in life is to continue validating the global ponzi system, both Fitch and Moody's announced they would slap the European Financial Stability Fund (EFSF) with its lowest pre-bankruptcy rating of AAA. Of course, this kind of rude reminder that the facility exists, and ergo, that Europe is still broke can only mean one thing: the EFSF is about to be used again, perhaps as soon as tomorrow, when Ireland, whose largest banks are insolvent, will attempt to sell €1-1.5 billion of bonds (although today's most recent blow up in Irish-Bunds spreads does not bode well for that particular auction). In fact, even Goldman's traditionally cheery Erik Nielsen says "As I have discussed in recent weeks, we think there is a measurable probability that [the EFSF] be activated some time next year – along with the IMF – for Ireland and Portugal, and it could also be used if Greece needs another dose of cash sometime later on." And just to confirm that even a cursory glance beneath the covers demonstrates that Europe is and continues to be locked out of general liquidity markets, is today's ongoing 7 day Liquidity Providing tender result, which for the 5th week in a row shows that one solitary bank is using the Fed's swap line to borrow the meager amount of $60 million at the whopping rate of 1.17%.
In other news, and continuing to be completely disconnected from life, the universe, and reality, are futures which surge overnight for no reason whatsoever.