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SNB Announces It Adds Portuguese Bonds To "Restricted List" Days Ahead Of Critical Bond Auction
A few days ago some were very surprised by the previously announced decision from the SNB that it the bank would cease accepting Irish bonds as collateral. Considering that the Swiss National Bank is now the only responsible institution left in Europe, now that floundering Jean Claude Trichet is willing to accept even used condoms at a 120% LTV as long as they have a sterling CCC- rating by S&P, we fail to see how this is surprising. That said, those same people may be even more surprised that the SNB has just added Portugal to its "restricted" list. The FT reports: "The Swiss National Bank confirmed on Friday that it had stopped accepting Portuguese government securities as collateral for repurchase (repo) agreements, adding Lisbon to Dublin among the eurozone governments on its ineligible list. The decision to exclude both countries follows steep downgrades of Portuguese and Irish debt and was based on the Swiss central bank’s strict, but highly transparent, acceptance criteria." What this means is that on Monday JCT will be very busy BTFD in Portuguese bonds. He will have many opportunities to do so, as everyone holding the paper will be bailing in droves. Furthermore, this disclosure could not have come at a worse time: with Portugal slated to hold another major bond auction next week (following the earlier abysmal 6 Month Bill auction), there is actual risk the entire affair could be a failure and set the European sovereign market ablaze, kicking off the 2011 round of "bail out Europe."
From the FT:
“Only securities that fulfil stringent requirements with regard to credit rating and liquidity are accepted as collateral by the National Bank,“ said an SNB official.
“Securities in foreign currencies must meet the following criteria: the issuer’s country of domicile and the securities must have a minimum rating of AA-/Aa3. Portugal does not meet these criteria and is therefore not eligible.”
The SNB’s website lists the criteria determining what collateral the bank accepts for repos. The information is update daily, based on market developments, and adjusted to reflect new issues, exclusions and redemptions.
The Swiss central bank did not specify when the decision on Portugal had been taken, or whether officials were currently considering further restrictions, potentially involving other members of the eurozone’s “periphery”, whose stretched national finances have put pressure on their bonds. “What’s central is the market,” said an official.
While the SNB’s procedures may appear restrictive, market participants said the bank was fully transparent, in contrast to some counterparts, which did not have explicit exclusions, but applied discounts (“haircuts“) on some governments’ bonds.
The Bank of England currently accepts Portuguese bonds as collateral for open market operations, according to a list updated daily on its website. But the Bank states that it “reserves the right to apply additional haircuts to any individual security at any time“.
As broadly expected, the fireworks in Europe will start early this year.
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I thought Europe was solved. /s
I think you mean insolvend
don't worry. My English is as bad as yours :)
Sudden Debt!
One of our other ZH-ers yesterday asked that YOU contribute more on Europe. You put up that column on the Hunt brothers & silver. ZH really could use general commentary on Europe as a whole and specific countries and situations as well.
Europe is big and important. But, I had to read about recent Euro problems on another site!
Take the plunge and be our Europe expert!
You da man! This is a collective of sharing like a potluck with paper bags on our heads. If the spaghetti hits the wall and spells best picture we all win; we need YOU to bring in your European experts and share the ride. The Sun is still free, enjoy it before GoldenSlax finds a way to privatize it and syndicate out the colors of the rainbow in global tranches.
Thin air isn't what it used to be
indeed, they should add some steam to it.
The air force will add some poison to it. That'll make it more powerful thin air.
More fun in the Eurozone Sewage works.
The law of diminishing returns!
So if there are rumors of emergency meetings over the weekend in Europe should I go long PG (adult diapers).
Money doesn't buy Happyness...
IT ONLY KEEPS YOU ALIVE AND BUYS YOU FOOD AND SHELTER!!
We have a meme, Houston. "Buy the fuckng dip" is immortal now, right up there with "too big to fail"
Let the games begin or re-start.
I think this means the entire country is on margin call.
When is the next POMO schedule?
when you get your face outta that culo
haha, culo ! BTFD!!!
Turns out my condoms didn't work so well. I've got pallets of used diapers for trade..110% LTV. I'll throw the shit in for free!
BP pluged their hole with golfballs!! WHY DON'T WE LEARN ANYTHING FROM HISTORY!!
BRING IN TYGER WOODS!! HE'LL KNOW WHAT TO DO!!!
HE DON'T NEED NO CONDOMS! ONLY GOLFBALLS!
TYGER WOODS FOR PRESIDENT!!!
just saying...
Great! Fantastic! Everything is said. EUR is doomed!
http://twitter.com/#!/lowrisk007
The REAL shit will hit the fan when the ECB won't accept its own debts as collateral for extra support to the poor countries.
Sell'em to the Chinese instead.
Wait what is that noise....I'm hearing helicopter sounds in the distance. Not to worry BBBBBen's got this all under control.
When did keeping up on financial(s) become a frikkin' soap opera??
Tune in next month, when Carlos (Espana) checks into re-hab...
Jean Claude Trichet is willing to accept even used condoms at a 120% LTV as long as they have a sterling CCC- rating by S&P
Man that's fucking funny.
The whole damn thing is tinderbox. It'll find a match sooner or later.
Leading 5 indicators all flashing correction warnings still.
1. Copper lower
2. Crude lower
3. Retail lower
4. USD higher
5. 10 year treasury yields lower
Like in Jan'10 and Apr'10, we may still get another run at the highs (or two) before the correction takes hold, but each of these indicators suggests strong caution.
Only sissies are cautious.
SPY has just put in a double bottom at 126.15 (prev 126.19). It appears that dip buyers are looking for the very first technical support level in which to buy.
Could carry into early Monday trade (if it continues to add into close today), and allow for another high 1270s re-test. That'll likely be yet another point to sell.
5 indicators still singing the same correction is imminent song though.
Apparently after losing tens of billions of Euros last year in a futile attempt to artificially keep the Euro propped up versus the Swiss Franc they are in cash-preservation mode over at the SNB.
It seems that the 11600 for the DJ and 1260 for the S&P have to hold in order to prevent a collapse. PPT doing their work preventing that.
Fresh from the press:
01-07 13:48: Portugal is in the process of making a private placement of bonds no details on size or buyer - Portugese finance ministry Maybe the buyer is The Bernank or then they are just making this stuff up to stop the meltdown. They already played the China-card, JCT has been BTFD for some time already so that pretty much leaves The Bernank and his evil twin The Sackman to do the job.When are they going to just get rid of Europe, tell the debt holders thanks for now, and divide the assets amongst Asian equityholders, making the continent part of Asia?
Isn't Portugal a suburb of Spain? lol
delete
Ha! Yet the Swiss Franc (and gold) has spent the last few days trading lower against the USD, with the Fed having accepted the worst of the worst collateral!
Though I guess the SNB accepts ECB obligations?