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Spanish Treasury Cancels New 3Y Auction
Given the recent market reaction to short- and mid-dated bond auctions in the European sovereign space, it seems the Spanish have blinked and decided to cancel the planned 3Y auction for next week. Reuters is reporting that instead of a single 3Y new issue, they are reopening 3 existing deals in the hope it will be easier to garner demand across several maturities and potentially more fungible for managers to add to existing positions than create new ones. Of course, it really doesn't matter too much as what we are concerned with is the secondary-trading 2015, 2016, and 2017 bonds will now be perfectly repriced at whatever is marginal demand for new risk positions - which we suspect will not be positive. The main reason for the shift to off-the-run, we suspect, is that the ECB is now allowed to 'buy' the bonds (not at re-issue but in the secondary pre-acution) as it is not allowed to buy primary issues. Once again - it smacks of desperation.
The shift to re-opening existing bonds is very much we suspect about the assistance they can garner from the ECB SMP. Theoretically the ECB can enter the existing market and put a bid into those specific bonds, new money bids for the new issues at marginally elevated levels from the secondary and could potentially flip the new issues right into the ECB's pleading hands. Euther way, re-opening as opposed to pure new issuance does have benefits from the central bank's 'visible' hand.
The WSJ reports here.
Reuters: Spain to sell 3 bonds instead of new 3-yr paper Dec. 1
* Bonds have 3 pct, 3.15 pct, 3.8 pct coupons
* Average yield of new 10-yr issued Nov. 17, 6.975 pct (Adds comment, details)
MADRID, Nov 25, (Reuters) - Spain's Treasury said on Friday it has replaced a planned new 3-year bond issue due Dec. 1 with three off-the-run bonds maturing in 2015, 2016, and 2017.
The announcement came after short-term debt yields in Italy - already struggling with higher borrowing costs than Spain - surged to levels regarded as unsustainable for public finances at a tender.
"It seems a sensible thing to do as there is a lot of pressure on the front-end right now," said Peter Chatwell, strategist at Credit Agricole.
"Also, Italy will sell a new three-year issue too so it will make it easier for the market to absorb by issuing at different maturities."
Spain has been under intense market pressure amid concerns euro zone leaders are not moving fast enough to resolve the debt crisis and yields on a new 10-year bond last week came close to the 7 percent level widely considered as unaffordable.
The bond maturing April 30, 2015 has a coupon of 3.0 percent, the bond maturing Jan. 31, 2016 a 3.15 percent coupon and the bond maturing Jan. 31, 2017 has a 3.8 percent coupon.
The Treasury is due to announce target amounts for the auctions on Monday around 1300 GMT
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This is bullish! This plus some chatter from Kernan next week about a Facebook IPO next year and everything is just hunky dory.
I camped out at the Spanish Treasury on black Friday to get a good deal on some bonds.
I got screwed.
Boy do I feel stupid.
EURUSD lovin' this.
Maybe Becky and the other genius ladies at CNBS will talk about the great shopping results at AMZN and LULU next week and then it is really off to the races. yahoo!!!!
Better start selling 500yr. bonds....
How about infinity bonds with variable cupon rate?... Playing in the path of a steamroller is no longer exciting enough. Let's play in the path of a bullet train!
Oh, btw, the variable rate on infinity bonds can go negative... so the holders have to pay the issuer money instead of collecting.
Sort of a commoditites contract with no expiry... and no control over put/call positions... Feeling lucky?
What could possibly go wrong?
ISDA and Buffett would be ok with those. AAAA+
that would be the british consol
trading since 1750s i think
does that give you food for thought?
"that would be the british consol"
LOL... I soulda knowed that some scammer in GB or Europe had already issued some such nonsense. Thanks Hemingway. Happy Day After T Day.
Futures are soaring but the EURUSD is down almost a percent since Wednesday close. Between Italy and Spain's credit (plus what is seen in the previous article) this is absolutely crazy. They can't even stick to their own BS of US markets tied to EUR strength.
And the Japan ten year is up...oh oh....here they go...I think Japan is the first Domino to fall....IMHO.....its the sleeper......
The Pain in Spain falls mainly on the Gain
My Fair Lady!
you aren't a fruit right?
Everything is better than expected today. Monday it will be back to reality
This must be the 'Americans will buy worthless crap that they don't need at huge discounts that won't help the bottom line' rally.
Here comes the no volume across the board 3% rally...
@ Tyler(s) or others,
Is the ECB allowed buy sovereign bonds from Primary Dealers after a period of time?
Allowed? Its practically their mandate these days.
So why the the Bund auction fail?
A nod and a wink to Deutsche Bank ......... "Buy them now and we'll take them off your hands in a months time".
Did the Germans want the auction to fail?
?
Primary =/= Secondary market.
Yes I get it.
Sorry to be a pain but my point is this.
They could have let the Primary dealer take up the offer, they could have had a side deal with another party in the market.
A month later they could have offloaded the Bunds on the ECB.
Now that may not sound exactly above board but I seem to recall that some Eurocrat, Juncker I think, actually said that Central Bankers lie when it is convenient.
I can' understand why they "let" it happen.
Anyway as this thread has slipped from the front page you probably won't get the reply.
Thanks anyway.
We can't have a negative market on the US' flock's biggest shopping day, can we?
Is this just a headfake going into the weekend, or terminate shorts today...? Hmmmm.
...YES, WE CAN!
...YES, WE CAN!
...YES, WE CAN!
'The main reason for the shift to off-the-run, we suspect, is that the ECB is now allowed to 'buy' the bonds...' Correction: "the ECB and the US FED will be buying the bonds..." Isn't this what we were always suspecting? A covert QE-everything.
INSOLVENT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Their Stable has all Four-in-One: as for you . . . you've only ever had hobson's choice
there is no eenie. Only Meanie
likewise there's never been a mine either, although minus is close
as for mo . . . over 300yrs of it under them, The Big Momentum increases to the extent that-- false choices, as with its underlying dialectic, hegelian or otherwise, {although a shizophrenic Is stuck with its dissociative splits|and whispering antitheses} again and again do seem to arise just before each and every Post-Time --every bookie,bettor,tout&tipster believes in any such a thing as a stakesrace at Rothschildt Downs . . . round'n'round, a mere merry-go-round, it's long-past time to know that when it comes to anything close to racing, roulette or runnin-in-circles in all their own casinos, totally owned, there are No numbers, entries, chances nor thoroughbreds, double-negative, beyond 1. Big Winner.
zero
otherwise, denying the obvious, keep betting it's an itsy-bitsy teenie-weenie . . . and you have eenie odds
__It's Now Post Time: nonetheless__
The message is: bond ratings are a reflection of how well a local government successfully suppresses working class and popular revolt.
That is lesson 1.
http://www.counterpunch.org/2011/11/24/meet-the-global-ruling-class-2/