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Spain, A Slightly Bigger Kick
Via Peter Tchir of TF Market Advisors,
Yesterday, we took a quick look at Italian bond issuance since October of last year. Today it is Spain’s turn. I think they have actually done a
better job. While the weighted average maturity of new Italian debt was only until August 2014, Spanish issuance has had an average weighted maturity of July 2015, almost a full year longer.
Only 49% of Spanish debt issued is covered by the LTRO maturity, that compares to 77% for Italy. Spain has even relied less on short dated financing with only 32% of their debt being 1 year or less, compared to Italy which had over 56% of its issuance in 1 year.
Generally I’m impressed that they haven’t catered their issuance to the LTRO program as much as Italy and have done a better job at issuing debt that doesn’t have to be rolled almost immediately.
The concern I have though, is that Spain has issued almost €100 billion of debt since November, compared to €156 billion by Italy. Italy’s total debt is €1.63 trillion (not including all the debt they have guaranteed), so Italy has issued less than 10% of their currently outstanding debt since November. Spain, with “only” €711 billion debt, has issued 14% of that total since November. Spain seems to have been issuing even more guarantees than Italy and to even worse institutions from a credit perspective (ie, ones that are more likely to rely on the guarantee for actual payment), so the trajectory of Spanish debt is concerning.
The maturity of the debt issued is better than Italy and better than I expected. The amount of debt issued and the fact that so many of the entities (regions, municipalities, caja’s) that Spain is indirectly supporting are in deep trouble, remains the main concern.
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"..the trajectory of Spanish debt is concerning."
No kidding!
Let's all salute-off the Kamakazi pilots on this mission
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They just need a year to pay the banks so only taxpayers have to take the hit
kicking the can, LTRO, dont fight the fed, low rate risk premium blah blah blah
That can is running out of room IMO- and to say the "market has priced this in" is utter bull shit
The plan is extend and pretend. Credit worthiness of whoever is guaranteed Does Not Matter. The plan is extend and pretend and that will continue indefinitely.
There is no endpoint to this in a monetary way.
Govts will do anything to keep the wheels turning. Gold is insignificant to society. If it became in any way significant, all transactions concerning it would be taxed at 70% globally. Bond vigilantes arriving to cause problems will be murdered. Govts will do anything.
Only that which cannot be changed by human hands can take this insanity down. That would be oil.
Just remember.. no can is too big to kick down the road.
http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=117.BSI.M.ES.N.A.A30.A.1.U2.2100.Z01.E
Spanish MFIs bought 39bn of Gov't bonds in January and Feb vs 38bn of gross
issuance so far this year.
How do you say ponzi is Spanish?
Olè!
Sovereign 5y. CDS Pricing
Paella: 416
Pizza: 365
NICE KICK!!!
UP TO THE FINALS FOR SPAIN TO!!!
but what else did you expect? Every latin country is a pro in soccer...
I've been shorting the IBEX on and off. Easy money so far, but the market has dropped so low,, that's it's making me nervous from a chart perspective. Fundamentals hoever only point in one direction.
There are only two solutions. Either Spain leaves the Euro and we have mayhem, but Spain will at least have a silver lining, or...
Germany decides to increase wages by 20% so that the € periphery has a fighting chance (like that is going to happen).