RBS Says To Expect A Spanish Sovereign Bailout Request "Within Days"
Probably not the news those who hopped on the Hilsenrath bandwagon of hope, prayer and bullshit were looking for. From Bloomberg:
- Spain likely to lose market access in near term, and will probably ask for precautionary sovereign bailout MOU “within days,” strategist Harvinder Sian writes in client note.
- ECB can act as agent to EFSF and buy Spanish bonds, lowering yields for Spain; BTPs to benefit by “correlation”
- Due to small size, this backstop would have “no credibility”; excluding risk that Moody’s cuts Spain to junk, ultimately SPGBs and BTPs will head to “double-digit” yields
- Giving ESM banking license is only “high-impact turnaround policy left”; however, Germany likely only to drop opposition to move at close to point of failure for EMU
It also means that those who bought non-local law Spanish bonds are about to be cremated as the PSI rears its ugly head once again. Everyone else who listened to us and bought UK, Swiss and Japanese law near-term bonds, should get taken out at par.