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Italy Immitates US, Tries To Lower Spreads By Increasing Bond Issuance, Fails
The idiocy in Europe knows no bounds. Just as the EURUSD was about to stabilize a little, and we use the term very loosely, Italy comes out and announces that due to its Robin Hoodesque task of rescuing Greece, and the need to shore up even more liquidity, that it would increase its bond issuance to €240-250 billion. As Market News reports: "Italy’s contribution to the EU’s Greece aid package is E14.736 billion out of a total E110 billion package from the EU and IMF, under the three-year economic and financial policy program. This year’s contribution is estimated to be around E5.4 billion. The first tranche of this loan E2.921 billion was paid in early May." Alas, unlike in the US where every new trillion in bond issuance
somehow results in a 50 bps tightening in the 10 year, Italy is not
quite so lucky. The result of this announcement: new all time high for Italy 10 year Bund spreads at 173 bps. And it doesn't end there: Reuters has just reported that talks between Sarkozy and Merkel, previously scheduled for today, have been rescheduled for June 14 (and probably cancelled as the two European leaders can't stand each other any longer) - is it all now falling apart in Europe behind the rosy rhetoric?
Back to the Italy new spike in issuance, where the biggest threat, just like in the US, are the billions in upcoming redemptions.
Italy has around E120.85 billion worth of redemptions in BTP/CCT/CTZ bonds this year to refinance and around E104.22 billion in T-Bills by year-end, whilst coupon payments are estimated to be E23.625 billion, according to MNI calculations.
Redemption payments are due to remain elevated in coming years, and estimated to be E191.0 billion in 2011, and E171.0 billion in 2012.
Cannata also confirmed that the debt agency has so far sold E102.735 billion this year in medium-long dated BTP issues, 2-year zero coupon CTZ bond, 7-year CCT and index-linked bonds.
The Italian Treasury is looking to sell a new 5-year 3.00% June 2015 BTP issue on Thursday as the current existing 5-year benchmark issue — the 3.00% Apr 2015 BTP issue already has a E20.032 billion current size outstanding. The Treasury is also due to tap the 4.00% Feb 2017 BTP along with the 4.00% Feb 2037 BTP issue. The size’s of these issues is expected to be announced on Tuesday, but most strategists expect around E8.0 billion issuance this week.Italy normally sells 5-year, 15-year and 30-year BTPs at its mid-month auctions, depending on demand and market conditions and 3-year and 10-year BTP issues, 7-year CCT issue and index-linked BTPei issues at its end-of-month auctions.
In terms of new bonds to be sold this year, Cannata said, “We issue 15-year and 30-year BTPs, although sometimes, following advice from our economists we can reopen old ‘off-the-run’ bonds”.
Italy has so far sold a new 3-year BTP on March 20 for E4.0 billion, a new 10-year 4.00% 2020 BTP for E5.0 billion on March 30 and a new 2021 BTPei issue — linked to the EU Consumer Price Index excluding Tobacco for E3.0 billion on April 21.
We will keep a close eye on the BTC ratios in these upcoming Italian auctions: we have a feeling the recent spate of failed auctions in Germany, Hungary and Romania will have quite a solid runway as we enter June. Should Italian Bund spreads continue probing new all time records, we won't have long to wait.
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My goodness, they are trying to so hard to crank the currencies today. Doesn't seem to be going to well for them at the moment. Everyone woke up...and the Euro falls. I love it, truly I do. Half life is like 4 hours on cranks jobs now.
I had a 4 hour crank job once. I was sore for weeks.
Goldman upgrades BMY, it pops 7%. Too bad Plavix, the second largest drug in the world is coming off patent in 2011. PLAVIX* represented 49% of total U.S. net sales and contributed 75% of total growth in U.S. net sales.
it also represents 33% of last quarters ww sales.
Goldman at it again...
The French casanova and the German nimf. I wonder what would come out of that is they ever procreated :)
Dominique Strauss-Kahn?
+1000
Brilliant
A retarded winged frog with currency issues.
Sancho Geithner.
German nimf? haven't heard that one.
Can't blame Sarkozy. Any reasonable man wouldn't touch Merkle with his worst enemy's dick.
Just let it go, Europe. You're helpless to stop it. You're spending the last of the capital to shore up a system that can't possibly be saved.
Just accept it and let it go.
exactly....stop putting off the pain get it over with quickly...unlike the US which is still in kick the can mode.
Europe, kiss your loved ones goodbye and embrace your destiny, stop fighting, everything is quiet and peaceful once its all over.
you guys just dont' understand Europe. They've been through 2 world wars due to a divided Europe--not to mention all 'em feudal wars since the 15th century. Current leaders are from a generation who can still remember the crimson, and clovers of apoalyptic world war. They will not let the EMU fail. This is their legacy to their forebearers.
In times of economic contraction, it's each country for itself. Times of prosperity lead to economic cooperation and free trade and oh so much love. The first age of globalization lasted from 1870 to 1914 and then fell apart with the coming of World War 1. European integration and collapse is nothing new, in the late 19th century the Europeans were crowing about how prosperous and integrated and peaceful they were and where did that lead them? The bigger they are, the harder they fall.
That psychology ensures that it will fail.
Actually the anomaly is this the EC "happy altogether" Their are just reverting to their normal which is; all scattered, chaos.
This is not according to the script.
We should be talking about the good news from Germany this morning instead.
German manufacturing is boooooming! This is wonderful news I tell you.
Nothing makes the Germans happier than the appreciation for German efficiency.
After all, what good is the German work ethic when it cannot prove itself in a demanding manufacturing sector!
We have seen what can happen when these efficient Krauts have too much time on their hands and "Vorsprung durch Technik" creates cutting edge weapons technology ... among other highly efficient products.
No, no let's talk about German manufacturing please!
And the Frenchies? Who cares what they do.
The French are just going to surrender anyway to whomever or whatever comes their way.
Germany is going to prosper immensely for the next few months atleast as the Euro declines. It benefits from all the bad news. Think about it, increased exports lead to less borrowing, the fall in the Euro makes Chinese, British and US exports much less competitive. The fact is that Germany is the core and the Euro would skyrocket if the weaker peripheral countries left given German strength, so that would be bad, the periphery is going to be culled slowly aka beggar thy neighbour approach and it will all favour Germany for a short while anyway before the whole credit system collapses and we descend into utter chaos.
We will not descend into chaos unless someone stands to profit from it.
This is not 1931, the world is a smaller place and there is no place to hide for anyone.
The financial markets may be boring for a while, reminding us of controlled markets.
There will be a renaissance of some sort and alot of time to reflect, learn and understand the environment, our purpose, our philosphies and all that.
The world has an abundance of resources and food. With new technologies the resources can be preserved.
Not saying we will not face challenges, but I believe cooler tempers will prevail in the end.
France & Germany HATE each other.................LOL
When did they not.
Sarkozy, is a whining ass, he is pissed because he knows Merkel & Germany, are the only respite for their 750 Billion exposure to Greece's Bank's..........
IOW, he wants them, to stay and keep their ass afloat.
Sarkozy cannot stop lecturing people, telling them what they need to do, why everything that has gone wrong is because others didn't follow his advice and why every success is down to his wisdom and skill. He doesn't seem to stop talking to allow others to speak and generally behaves like a arrogant coked-up nightclub owner (why he and Silvio get on so well.)
I think Merkel is making the point there is no reason to meet as she doesn't need another of his self-aggrandizing rants and he has humiliated her twice over Greece and the EU "bazooka" agreement.
Hopefully the French electorate realize the damage this perfumed popinjay has done to the relationship with their key partner.
Summer of FAIL
I guess we will be forced to watch the same old rabbit pulled out of the hat trick 4 or 5 more times though. Boring!
Anyone know what was served for lunch at Friday's Bilderberg meeting? Just curious.
Smoked red herring
Humble Pie
Rasperry fool
yeah, its so: http://www.youtube.com/watch?v=e7mmrF-4rUE
as far as lunch, maybe a "Louisiana Back Bay Bunny Bordelais, a la Antoine."
Their relationship hasn't been the same since Sarkozy started shorting bunds like mad and siphoning off the money to Greece. It pissed him off royally when Merkel tried to stop him by imposing the short ban. Merkel has now included short French presidents in the ban.
+1 !
Sarkozy wears shoes with "elevated" soles.
To catch up with the happenings of the past week, AEPs next (and long overdue) article for The Telegraph is going to have to be about 15 pages long.
Mind you, there's always the possibility that he's found a more appreciative audience elsewhere that he can address without editorial constraint.
I am also anxious to hear AEP's view once he returns from his "alternative lifestyle getaway".
ARRIVA DERCI EURO:
http://williambanzai7.blogspot.com/2010/06/arriva-derci-euro.html
Let's hope Obama doesn't speak today. Markets might hold for a while longer.
It's just comedy at this point. One country having to borrow money to help bail out another.
Sorry, Tyler. This time you are wrong.
Maybe the euro won't survive. That would be according to the script(of the PTB): first the euro must break, then it will be the case for the dollar, finally the new world currency will appear.
However with Italy they may have made the wrong bet. Italians have a high official saving rate and a lot of .... "tax free" informal economy spare change.
The sentiment is rather strong here. The issue will be bought up.
Do you want to bet ?
This little article from Der Spiegel has some amusing details.
It's amazing how little self proclaimed expert even in Europe really understand Italy. The article of Der Spiegel is a fantastic example.
"The situation is no different in Italy: The country, one of the founding members of the European Union, has been in a state of political denial for years. The people of Italy doze in front of the television programs of media czar and Prime Minister Silvio Berlusconi, who himself has made a fulltime job of protecting his supporters in parliament with more and more new laws that will save them from prosecution. Meanwhile, opposition politicians are devouring each other over trivialities."
Where, by grace, in the Western world (or even elsewhere) people do not doze in front of the television programs ?
Does the author understand a few words Italian (except maybe for pizza spaghetti and mandolino) ? The vast majority of Italian media varies from self professed anarchists, left hard core liberals to self proclaimed communsits of the pro-stalinist strain, even on the TV channels of the "media czar and Prime Minister Silvio Berlusconi".
Where in the Western world a Prime Minister and his private enterprises have gone through more than, literally, 2000 police and fiscal police heavy searches, without results ?
Where else, these days, in the Western world a Prime Minister has a popular approval rate and consensus above 62 % of potential voters ?
All Italians are just stupid pizza and spaghetti eaters ?
C'mon.
C'mon Spaghetti,
Not all Prime Ministers invite other heads of states to a relaxing weekend in his house filled to the brim with prostitutes either. (wasn't it the Hungarian that got caught with his little finger in the cookie jar).
Berlusconi is a nuthead and would make a better pimp than Prime Minister. I still prefer him to Obama though.