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Holy Shitshow: Recordathon In French Bank, European CDS Following Atriocious Italian Bond Auction, Dexia Bail Out, Libor Explosion

Submitted by Tyler Durden on 09/12/2011 07:19 -0400

As we speculated on Friday, Europe has opened, and it is ugly. In fact, Europe has never been closer to a bank and market holiday than it is right now. Why? Let's go down the list.

First, the French banks which are about to be downgraded any minute, have just seen their CDS surge to records:

BNP CDS +24 to 299 bps
SocGen CDS + 26 tp 416 bps, new all time record wide
Credit Agricole CDS + 25 to 315 bps, new all time record wide. Whoever followed our advice from last week and bought this latest jump congratulations.
And joining in the record party, are Belgium +25 at 307 bps; France +12 at 190; Italy +40 at 505; and Spain +44 at 445 bps. All new records

Next, Italy sold 91 Day and 1 Year bills, both of which came far worse than expected and this is despite the ECB buying this stuff up non stop.

Italy Sells 1-Year Bills to Yield 4.153% Vs 2.959% in August, Bid to Cover slides from 1.94 to 1.53
Italy Sells EU4 Bln of 3-Month Bills to Yield 1.907% Vs 1.034 last, Bid to Cover slides from 2.42 to 1.86

Lastly, Dexia, which we also discussed on Friday, was just implicitly bailed out. According to De Tijd:

The inner cabinet of the federal government Monday decided to Holding Communal jumping high urgently needed cash. The Dexia shareholder as his immediate obligations.

The federal government decided late last week the ailing Municipal Holding 1 / 1 by the lifeline to throw 39 percent of the holding company for Astrid 40 million to take over. Astrid is the communication of the Belgian security services.

Soon appeared a problem. Holding Communal Astrid had its shares already pledged to Dexia Bank in exchange for a loan of 48 million euros. Holding Communal, the largest shareholder of the Belgian group Dexia, with a stake of 14.1 proent.

Followed the weekend summit push, with a modified construction of the bus came. The inner cabinet bowed there Monday at 8 hours and carried on with the green light. Poured concrete, the federal government holding to 4.5 million immediately SFPI Monday, Holding Communal, in exchange for part of the Astrid shares. That gives the holding company breathing space and allows it to meet its immediate obligations.

Later Monday morning meeting and the Holding Communal FPIM on the deal.

SFPI would spend the rest of the amount (35.5 million) and Dexia Bank Belgium only pay the rest of the Astrid-shares, which it has pledged, releases.

The deposit is extremely urgent, the water is the dome of the municipal Dexia shareholders on the lips. Holding Communal is already in bad financial paper.

This is due to its strong dependence on the share price of the Dexia financial group. The holding company was in full support and financial crisis, Dexia borrowed before. As collateral for the loans they used Dexia shares. But now, their price has dropped sharply, the banks ask - - initially Fortis and ING - additional collateral.

The holding should that "margin calls" within ten days 19.5 million euros available. Otherwise there is a cessation of payments. The holding company has pledged it all, so the only option is to bring cash as collateral. This requires that 40 million euros, or write it already 1 / 1 of 4.5 million, serve.

Lastly, Libor, which we have been following very dilligently, has literally exploded, meaning the Interbank market in Europe is now effectively shut down. From Bloomberg:

Credit Ag submits higher rates for sixth consecutive session as USD 3-mo Libor rises to 0.343% from 0.338% Sept. 9, highest since August 2010, BBA data show.
BNP Paribas 0.36% vs 0.35%
Credit Ag 0.41% vs 0.4%
SocGen 0.3575% vs 0.3525%
Bank of Tokyo-Mitsubishi 0.36% vs 0.35%
Bank of America 0.32% vs 0.31%
Citi 0.305% vs 0.3%
Credit Suisse 0.395% vs 0.3750%
Deutsche Bank 0.3% vs 0.29%
HSBC 0.26% vs 0.25%
Norin Bank 0.38% vs 0.375%
RBC 0.3125% vs 0.3075%
Scotia 0.315% vs 0.31%
Sumitomo 0.37% vs 0.365%
UBS 0.361% vs 0.359%

And there still is 3.5 hour of trading in Europe. Next up: halt in trading in all Italian bank stocks for a start, slowly migrating to all banks across the continent.

- advertisements -

Mon, 09/12/2011 - 07:21 | 1658851 wang (not verified)

As we speculated on Friday, Europe has "opened"

and the optimisim ends there

Mon, 09/12/2011 - 07:27 | 1658852 sqz

"And joining in the record party, are Italy +25 at 307 bps; France +12 at 190; Italy +40 at 505; and Spain +44 at 445 bps."

Error there. You mean, Portugal for one of the Italy's?

Gotta love Google Translate of German too :)

Mon, 09/12/2011 - 07:32 | 1658867 Tyler Durden

Actually worse: Waffles!

Mon, 09/12/2011 - 07:43 | 1658903 Snidley Whipsnae

Gotta love the reference to 'concrete' in the article... Perhaps they meant liquid concrete?

Mon, 09/12/2011 - 07:46 | 1658923 Lobbelt

Dutch, not German. "De Tijd" is a Belgian paper for the Dutch speaking part of the country (Flanders). "L'Echo" is its French-speaking counterpart. :-)

Mon, 09/12/2011 - 09:17 | 1659201 slewie the pi-rat

well i guess we gotta say tyler nailed it, again, with his piece abt the maginot line over the weekend!

un-freaking-believable!!!

durden's prob got 150 tix to r.paul's inaugural, too!

Mon, 09/12/2011 - 07:27 | 1658853 AUD

The inner cabinet of the federal government Monday decided to Holding Communal jumping high urgently needed cash. The Dexia shareholder as his immediate obligations.

The federal government decided late last week the ailing Municipal Holding 1 / 1 by the lifeline to throw 39 percent of the holding company for Astrid 40 million to take over.

Well that's a perfectly understandable outcome.

Mon, 09/12/2011 - 07:34 | 1658870 AUD

And meanwhile, gold is down in Euro's & even though the bid to cover has fallen, Italian bonds are still oversubscribed, despite that slick con man in charge.

Hardly panic.

Mon, 09/12/2011 - 07:37 | 1658882 jus_lite_reading

I think you ain't seen nothing yet.... the wild cards have yet to be released!

Gold will be 1600 Euros/oz in a few weeks according to the bird... and that means its hitting the fan now

Mon, 09/12/2011 - 07:42 | 1658902 AUD

Maybe so but at present the bond speculators are happy to sell gold for the chance to make a quick profit off of the ECB.

Get back to me when the real panic starts, when the gold price only moves up, not down too.

Mon, 09/12/2011 - 07:47 | 1658927 Instant Wealth

urgently needed cash ?

Could be me.

Mon, 09/12/2011 - 07:51 | 1658943 minsky4ever

Greenspan writes their material. He'll be in the background til this bitch explodes.

Mon, 09/12/2011 - 07:24 | 1658854 1835jackson

What a frickin circus....ahhh central banks with their central planning

Mon, 09/12/2011 - 07:34 | 1658855 Soul Train

You are witnessing the effects of fiat money, fraud, stupidity,arrogance and cronyism.

And add in incompetence and greed to the mix.

Transparency and professional ethics? Ha ha ha ha ha ha ha ha ha ha ha ha ha.

One solution: something like the French guillotine used so successfully during their revolution, once the sheople had enough of plutocratic/autocratic elitism - call it whatever you want. Fucking downright evil.

Mon, 09/12/2011 - 07:52 | 1658949 minsky4ever

Bon jour, Marat. Ca va?

Mon, 09/12/2011 - 07:26 | 1658856 tim73

Who cares...you Yanks and Brits will pay for it. After all, you guys sold us the CDS insurances! Fuck, this is so beautiful. Go ahead, really hope for Greece to default and give us your "advices" how to do it more quickly...SUCKERS! HA HA HA HA HA HA HA HA HA!

Mon, 09/12/2011 - 07:33 | 1658869 Gordon Freeman

Blow me...

Mon, 09/12/2011 - 09:16 | 1659197 snowball777

Mon, 09/12/2011 - 07:25 | 1658857 Reform1776

Does everyone here realize that sites like ZH and BusinessInsider are doing to mainstream market-related media sources what Craigslist did to the Classifieds sections of major newspapers???

http://sadbastards.wordpress.com/2008/05/23/craigslistorg-single-handedl...

Mon, 09/12/2011 - 07:41 | 1658897 Snidley Whipsnae

I can't speak for 'everyone' but I recognize what is going on re: ZH vs bobbleheads on MSM...

This morning the world financial system is in jeopardy of collapse but when one reads Bloomblab or Marketfarce the take away is 'all is well', 'nothing to see here', 'remain calm'...

Fiddling while it burns.

Mon, 09/12/2011 - 08:38 | 1659072 Reform1776

If they're not running an outright puff piece, at best it's like reading yesterdays, or even last weeks, or last months newspaper.

Mon, 09/12/2011 - 09:19 | 1659212 slewie the pi-rat

fuk "business insider"!

and fuk you, too!

Mon, 09/12/2011 - 07:29 | 1658859 Wakanda

Holy shit show indeed!

Mon, 09/12/2011 - 07:29 | 1658860 oogs66

but aren't obama and buffett going to fix everything?

Mon, 09/12/2011 - 07:31 | 1658866 doomandbloom

...as soon as they get out of that bath...

Mon, 09/12/2011 - 07:30 | 1658862 chipshot

brother can you spare a dime.....oh- i mean a hunski?

Mon, 09/12/2011 - 07:35 | 1658876 Reform1776

As Ron Paul pointed out in the debate recently, if you can spare a dime, you can buy a gallon of gas with it. A pre 1964 silver dime that is...

Mon, 09/12/2011 - 07:30 | 1658864 1835jackson

Reform1776- knowledge is power and ZH is on the money....

Mon, 09/12/2011 - 07:34 | 1658873 Gordon Freeman

What were the relevant LIBOR spreads during Lehman? How do the current ones compare?

Mon, 09/12/2011 - 07:53 | 1658941 sqz

EURIBOR-OIS: 85.3bp highest since Mar-2009 nothing like Lehman high of 206.9bp. But the point is you really really don't want a "trend" since it's self-feeding into confidence and trust and can therefore blow-out faster than you can blink and its a bit of a slow-motion train wreck, i.e. hard to stop when it does. It also isn't really a true reflection of the stresses happening on the ground inside banks...

Mon, 09/12/2011 - 08:12 | 1659021 ZeroPower

Nowhere close, about 3x left to go. EURIBOR-OIS confirming the same..widest level in 2 1/2 yrs, but nowhere close. Yet.

edit: sqz said everything well

Mon, 09/12/2011 - 07:45 | 1658912 Rastadamus

Swing looooow! Sweeet Chariot!

This ones gonna carry me hoooooooommmmme!

Mon, 09/12/2011 - 07:49 | 1658938 sunnydays

One wild week that will catch those who have not been paying attention go nuts. The rest of us will have popcorn and sit back and watch the show.

Mon, 09/12/2011 - 07:51 | 1658946 Tristan Ludlow

I wish I had a fast forward button to get to Friday to see what carnage the banksters have wrought!

Mon, 09/12/2011 - 07:55 | 1658961 minsky4ever

Just look around, you should see some poor soul begging who used to have a family and what he thought was a secure job.

Mon, 09/12/2011 - 08:11 | 1659023 Sabibaby

An explosion at a nuclear plant in France won't bode well for markets either. More news coming, just heard it on local news station, no details yet.

Mon, 09/12/2011 - 08:14 | 1659025 Sabibaby

Here we go -> http://www.cbc.ca/news/world/story/2011/09/12/france-nuclear-plant-explosion.html?cmp=rss

Not sure how this will impact stocks, probably well send them radioactive. Algo's like radiation, causes more latency for everyone else.

Mon, 09/12/2011 - 08:29 | 1659058 how to trade ar...

It's looking like another good time for bears to take profits, but not a clear and easy call., Don't want to be too greedy but don't want to miss the next leg down, either.

Mon, 09/12/2011 - 10:32 | 1659481 ceilidh_trail

I agree. Covered friday, looking to figure when to catch another wave. The signs are here, but hard to believe the .govs will not try to prevent meltdown...

Mon, 09/12/2011 - 08:33 | 1659066 Peter K