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Spain Borrowing Costs Triple In One Month, Italian Yield Firmly Above 6% Again

Tyler Durden's picture




 

Not much to add to Reuters summary of the overnight Spanish bill auction. The good news: the country that is not Uganda sold €3.08 billion compared to a range sought of €2-3 billion. The bad news: the price paid to sell this debt more than makes up for any optics that this was a good deal. "Spain's short-term borrowing costs nearly tripled at auction on Tuesday, underlining the country's precarious finances as it struggles against recession and juggles with a debt crisis among its newly downgraded banks. The yield paid on a 3-month bill was 2.362 percent, up from just 0.846 percent a month ago. For six-month paper, it leapt to 3.237 percent from 1.737 percent in May... Spain sold 3.08 billion euros of its short-term debt on Tuesday, slightly above its target amount, even as the Treasury paid the highest rates to sell the paper since November and met with falling demand from the country's struggling banks. The Treasury sold 1.6 billion euros of a 3-month bill, and 1.48 billion euros of a 6 month bill, which together was just above the 2-3 billion euro target set. The Treasury has overshot its sales target in recent auctions, showing it still is capable of selling its debt even if has to rely on domestic banks to do so as international investors avoid Spanish debt." Here's a hint to whoever is pretending to be in charge of Spanish finances: selling more debt than the "max" just to show you still have bond market access (i.e., debt bought by just downgraded Spanish banks) while paying ridiculous interest on this "optical success" is about the dumbest thing a broke country can do. But who are we to judge. We will leave that to the bond market. Below we show the yield on the Spanish 10 Year, which in two days has retraced the entire move tighter in the past week.

Elsewhere in Italy we get more good news:

  • ITALY APRIL SALES DECLINE 6.8% YOY, BIGGEST DROP SINCE AT LEAST JAN. 2001
  • ITALY SAID TO REVIEW DECREE TO ALLOW BANKS TO SELL BONDS TO GOV

That, and of course this:

Italy paid 4.712 percent to sell two-year paper on Tuesday, a new high since December, as investor doubts have grown about whether a European summit later this week will deliver a decisive answer to the bloc's debt crisis.

 

Pressured by rising interest payments on its 1.95 trillion euro debt and a deepening economic recession, speculation has grown that Italy is at risk for being forced to seek external assistance to continue finance its debt.

 

It sold a total of 3.9 billion euros in zero-coupon and inflation-linked bonds - near the top of its planned range - ahead of a six-month bill sale on Wednesday and a more challenging offer of five- and 10-year debt for up to 5.5 billion euros on Thursday.

 

The yield on zero-coupon bonds due in May 2014 rose sharply from the 4.04 percent level Rome paid only a month ago on the same paper. The sale was covered 1.65 times, roughly in line with May's slightly bigger auction.

Which brings us to another diagonal bond yield chart over the past three days: that of Italian bonds.

 

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Tue, 06/26/2012 - 07:07 | 2560814 augie
Tue, 06/26/2012 - 07:09 | 2560815 bdc63
bdc63's picture

I wouldn't loan Spain money if the yeild was 90%

Tue, 06/26/2012 - 07:16 | 2560821 Sudden Debt
Sudden Debt's picture

On a daily basis I would think about it

Tue, 06/26/2012 - 07:28 | 2560831 GetZeeGold
GetZeeGold's picture

 

I'd put them on an hourly pay plan.

 

Tue, 06/26/2012 - 07:16 | 2560822 battle axe
battle axe's picture

"This is the end, this is the end my friends"- Doors

Tue, 06/26/2012 - 07:30 | 2560832 GetZeeGold
GetZeeGold's picture

 

 

I think the "end" will be a lot louder than this.....still time to get your earplugs.

 

Tue, 06/26/2012 - 07:13 | 2560818 BBullionaire
BBullionaire's picture

All the western nations are circling the plughole. What I want to know is when is it the UK's turn? it's the most indebted nation in the world and has just hit 1 trillion in debt.

http://bulletsbeansandbullion.blogspot.co.uk/

Tue, 06/26/2012 - 07:20 | 2560826 valley chick
valley chick's picture

Patience BB...first let me enjoy the Italian moment.... :)

Tue, 06/26/2012 - 07:27 | 2560830 BBullionaire
BBullionaire's picture

Patience is a bitch, my bullion has only doubled in the last five years.  Thats not a great return. If the UK blows then my brittainia coins will really be worth something. Bring it on.

Tue, 06/26/2012 - 07:27 | 2560829 aleph0
aleph0's picture

UK : " just hit 1 trillion in debt." ?

.... & Germany's 2 Trillion ?

No problem , with the ESM it'll grow  faster than the UK's trillions.

Tue, 06/26/2012 - 07:31 | 2560833 BBullionaire
BBullionaire's picture

The Office for National Statistics today confirmed public sector net borrowing, excluding financial interventions, such as bank bailouts, was £17.9billion in May, up from £15.2billion in May last year.

It takes the UK's national debt to £1.0134trillion - or 65 per cent of GDP. In a further blow, the ONS revised last year's borrowing total higher, by £3.2billion to £127.6billion, which means the government narrowly missed its £126billion target.

Read more: http://www.dailymail.co.uk/money/news/article-2164875/Osbornes-deficit-plan-blown-course-UK-borrowing-jumps-17-9bn-May.html#ixzz1ytjd4X2m

I know you Americans can burn through that in a few months but for us poor brits that's a lot of money!

http://bulletsbeansandbullion.blogspot.co.uk/

Tue, 06/26/2012 - 07:15 | 2560819 Sudden Debt
Sudden Debt's picture

THANK GOD ALL THOSE MEETING SOLVED EVERYTHING!!

NOW LET'S SPEND SOME DOUGH!! Lapdances on the house!!

Tue, 06/26/2012 - 07:25 | 2560825 slaughterer
slaughterer's picture

3-4 more days ... then Europe will be whooshed away hopefully, then we can be all rid of this.

Tue, 06/26/2012 - 07:41 | 2560854 Sudden Debt
Sudden Debt's picture

Europe is dead...

ALL HEIL EUROPE V2.0!!!

Tue, 06/26/2012 - 07:46 | 2560866 Sudden Debt
Sudden Debt's picture

WHY NOT JUST SHIP ALL THE SPANISH PEOPLE TO IBIZA AND TAKE ALL THE REST LIKE A PAWN SHOP DOESN!?!?!

ALL YOUR LAND BELONGS TO US!! LEBENSRAUM!!!

Nostradamus did say that Ibiza was the last place of survival when the world ends... and so the world ends for spain.

IT AIN'T NO JOKE IF YOU DON'T PAY THAT NOTE!!

REPO BITCHEZ!!!!

Tue, 06/26/2012 - 07:17 | 2560823 Hermann
Tue, 06/26/2012 - 07:57 | 2560895 BlueCollaredOne
BlueCollaredOne's picture

WOW.

I didnt know their was two of you fucking looneys out there.  You and that "ClickHereFedsCoverUpSarahPalinExposed" should team up and compare findings.  You guys could really blow the lid off the place.   

Im hoping this isnt some sort of lame disinfo to try and frame people who question propaganda, because if so a 22 year old stoner could put together a more coherent presentation. 

 

 

Tue, 06/26/2012 - 08:13 | 2560968 Hermann
Hermann's picture

Thanks man! Same to you

Tue, 06/26/2012 - 08:41 | 2561089 BlueCollaredOne
BlueCollaredOne's picture

In case you haven't seen his site, check it out

He's found a few more celebrity lookalikes than you, time to get to work. 

You know the other day I noticed that George Carlin kinda looks like Charles Darwin and then it hit me.  Darwin found the fountain of youth and is indeed immortal.  He's been on earth so long that he has become cynical.  Its obvious, heres the pics to prove it. The names even sound the same, and both have 6 letters which is a dead giveaway that they are the same person.

George Carlin

Charles Darwin

Tue, 06/26/2012 - 07:24 | 2560828 slaughterer
slaughterer's picture

Let's take bets on 2013:

1) Greek bailout number 4

2) 30-40 EuroSummits with full catering for the year 2013

3) European leaders still working on the fiscal pact

4) PIIGS debt still spiking above 6-7% yield. 

5) Germany still saying "NEIN"

6) TARGET 2 even higher

7) Mario Draghi still jawboning a third LTRO.

8) world markets still correlated with EUR/USD volatility

9) ZH still analyzing seniority cram downs on ESM/ESFS bailouts

10) Bunds still yielding negative real rates

Tue, 06/26/2012 - 07:42 | 2560858 stocktivity
stocktivity's picture

...and probably 2014 as well. As long as the printing presses can keep printing, It's all Bullshit!

Tue, 06/26/2012 - 07:58 | 2560904 Sauk Leader
Sauk Leader's picture

I will Parlay 1, 2, 3, 4, 5 and 9. What are the odds? In the short term, What is the over under on the time it takes Germany to refute rumors coming through the wire this week? I say there will be 3 total with an average of 1 hour to say NEIN!

Tue, 06/26/2012 - 08:55 | 2561140 GMadScientist
GMadScientist's picture

I'll take the odds on 1, 5, and 9.

Yeah, I think the German refutations would be better suited to a pool where we pick times and dates.

Or a drinking game, if you don't have to work this week.

Tue, 06/26/2012 - 07:32 | 2560834 BBullionaire
BBullionaire's picture

11) Global Thermonuclear War?

Tue, 06/26/2012 - 07:33 | 2560836 BandGap
BandGap's picture

"Optical success" is the phrase that pays here.

Spain has been in the shitter for years, and now they have chosen the path of "it is better to look good than to feel good, darling". That will likely end in a crash and burn scenario.

Tue, 06/26/2012 - 07:39 | 2560851 CPL
CPL's picture

hors D'oeuvre?  Crab cake?  Economic Cancer?

 

Don't mind if I do.

Tue, 06/26/2012 - 07:35 | 2560839 Hulk
Hulk's picture

Amazing that anyone buys this crap. Everyone counting on a backstop that in reality, is just optics

Watching all the financial shenanigans, over the past couple of years, sure does beat any movie I have ever seen...

Tue, 06/26/2012 - 07:40 | 2560852 CPL
CPL's picture

This show has some of the best villians I've seen in a while.  I wonder how they die at the end like villians usually do.

Tue, 06/26/2012 - 07:44 | 2560863 BlueCollaredOne
BlueCollaredOne's picture

Shamefully I see alot of villains, and so very few heroes willing to fight back.  Time will tell. 

Tue, 06/26/2012 - 08:50 | 2561114 GMadScientist
GMadScientist's picture

They just have good urban camo.

Tue, 06/26/2012 - 07:41 | 2560857 BlueCollaredOne
BlueCollaredOne's picture

World politics/finance is hollywood for ugly people

Tue, 06/26/2012 - 08:57 | 2561142 GMadScientist
GMadScientist's picture

With tiny dicks! (yes, this means you, Angie)

Tue, 06/26/2012 - 07:38 | 2560841 timbo_em
timbo_em's picture

How cares about yield? As long as bid-to-cover > 1 MSM will consider the auction as a success.

Tue, 06/26/2012 - 07:46 | 2560867 disabledvet
disabledvet's picture

These are Sovereign credits. Unlike what is portrayed in the media and CNBC in general and Tom Keene in particular "once these things head south they have nowhere else to go." In other words this HAS BEEN AND WILL CONTINUE TO BE A RESTRUCTURING PLAY. Even worse are those who portray this a mere "debt crisis"...as if "austerity" was somehow ever going to "solve" a problem such as this. Problems like this must be RESOLVED. These are ACTS OF WILL. Witness our own crisis of 2008. Europe has yet to EVEN ACKNOWLEDGE THIS FACTUAL CONDITION. As i and I ALONE have said from the beginning "acts of will involve the military." On a good that "it's a quick consult with the General." On a bad day "it's constant trips to Brussels"...or an actual "Rubicon."

Tue, 06/26/2012 - 07:55 | 2560889 verum quod lies
verum quod lies's picture

Some patience please; as Dmitry Orlov famously said: "Collapse is a process." Why the big hurry? Alright I admit, this would be a heck of a lot funnier if it weren't so painful to watch, and especially to listen to the talking head idiots. Also, before the great "collapse" of the Euro, or any other currency for that matter (and ignoring the collapse of the Icelandic krona a few years ago; because the EU and the rest of the planet have no intention of following a successful example), I need to get that newsletter from that investment "professional" that keeps writing articles and telling us how it's all go to end with the banksters allowing "deflation" to end the game. You know the guy who thinks Eurocrats, USocrats, Japanocrats, Chinocrats, etc. will sit back and not print when the average central banker, Paul Krugman, Larry Summers and related fellow travelers think that somehow we don't have enough currency & debt, or enough government, or enough regulations, etc. Sure let’s all have meetings where we ignore the clear solution and emerge declaring that the solution to the problem is more of the same (again, let’s all ignore Iceland). Anyway, the euro as it stands today will end soon enough with or without our wishing it just already ended. It will end when it finally becomes clear to the brainwashed masses that an additional case of whiskey will not get them to heaven, but more likely provide them with the winning lottery ticket to financial and economic hell. Welcome to cultural Marxism as applied to economics MoFos; that is, welcome to “globalism” ands the race to the bottom.

Tue, 06/26/2012 - 08:10 | 2560959 Alejandrito
Alejandrito's picture

Spanish financial costs have always been high, and only when logged in euro have been able to reduce interest rates

http://leadenhallst.blogspot.co.uk/2012/06/pain-in-spain-in-simple-image...

Tue, 06/26/2012 - 08:49 | 2561110 GMadScientist
GMadScientist's picture

Yields fast approaching "not with my enemy's dog's dick" levels.

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