T-4 Months For Portugal And Counting

Tyler Durden's picture
Submitted by Tyler Durden on 01/30/2012 10:05 -0400



Portuguese 5Y bond yields just broke to Euro-era record levels at over 22.5% taking then up to the same levels at which Greece traded just four short months ago. Ironically, Bloomberg notes that:

  • *ECB SAID TO BE BUYING PORTUGUESE GOVERNMENT BONDS TODAY

which appears to be wholly focused on the short-end, as the long-end is blowing out. It also seems that many want to talk about the CDS blowing out but as we have seen time and again with Portugal (since its bond market is less liquid than the already thin CDS market), bonds are underperforming notably as real money exits in a hurry.

And while comments are plenty that Portugal is smaller and is not Greece, they have (relatively speaking) notable maturities within the next few months (EUR 10bn by May2012) that will not be able to roll in the private markets and then a large lump of over EUR 10bn in June.

Chart: Bloomberg


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Mon, 01/30/2012 - 10:09 | 2109299 GetZeeGold
GetZeeGold's picture

 

 

 

Still time.....it's like 200 years in doggy years.

 

 

Mon, 01/30/2012 - 10:28 | 2109367 Thomas
Thomas's picture

Get Isabella or Ferdinand on the phone.

Mon, 01/30/2012 - 11:56 | 2109676 Don Diego
Don Diego's picture

Duke of Alba, assemble the Tercios

Mon, 01/30/2012 - 11:59 | 2109688 Don Diego
Don Diego's picture

on second thought, never mind, the duke of Alba is now a Duchess that just got married to a very lucky dude, pictures in the link http://www.rankingfamosos.com/ver-famoso/la-duquesa-de-alba/341

Mon, 01/30/2012 - 21:45 | 2111516 Buck Johnson
Buck Johnson's picture

I seen pictures of that Duchess, she looks horrible.  Thats what happens when you don't have somebody saying you shouldn't keep getting plastic surgery. 

Mon, 01/30/2012 - 10:11 | 2109303 Ahwooga
Ahwooga's picture

One would almost think they are contemplating giving this up. Clearly it hasnt worked in getting yields to stay down. Expensive habit with a shorter time horizon coming with every hit.

Mon, 01/30/2012 - 10:58 | 2109495 Oracle of Kypseli
Oracle of Kypseli's picture

Alea iacta est.

Next to get the memo Spain.

Mon, 01/30/2012 - 10:11 | 2109304 MoreNails
MoreNails's picture

Today is the final day before Portugal sovereign bonds are out of indices. All indexed / benchmarked funds sell, whatever the price, today & tomorrow.

Mon, 01/30/2012 - 10:11 | 2109305 oogs66
oogs66's picture

portuguese banks will issue bonds to themselves, get a portuguese government guarantee, use those bonds to borrow from the ecb, to buy portuguese bonds, why all the doom and gloom?

Mon, 01/30/2012 - 11:02 | 2109502 Acet
Acet's picture

Well, the carry trade for Portuguese banks has been to get cheap money from the ECB and then lend it back to the Portuguese government at 7%. This has been going on for quite a while now.

Not surprising given that Portuguese banks have almost no presence outside Portugal and if the sovereign defaults they'll be screwed no mater how small their exposure to government bonds.

Mon, 01/30/2012 - 10:13 | 2109314 orangedrinkandchips
orangedrinkandchips's picture

exit...STAGE LEFT EVEN!

 

Mon, 01/30/2012 - 10:22 | 2109342 westerman
westerman's picture

I assume it will mysteriously drop to 6% after some form of intervention. The question is how many countries can be kept afloat by printing and bail outs?

Mon, 01/30/2012 - 10:23 | 2109345 misterc
misterc's picture

They need a German Generalgouverneur / Kommissar, too. Anschluss!

Mon, 01/30/2012 - 12:01 | 2109699 Don Diego
Don Diego's picture

I prefer the term Gauleiter, like in the good old times

Mon, 01/30/2012 - 10:23 | 2109346 EconSammie
EconSammie's picture

Yes Portugal has serious problems and I have just been reading a blog post on her economic situation which has created a lot of interest on twitter.

More evidence emerges that Spain and Portugal may bypass recession and go straight to depression

Mon, 01/30/2012 - 20:38 | 2111359 StychoKiller
StychoKiller's picture

Greece:  "Roger Portugal Bonds, go with throttle up!"

Mon, 01/30/2012 - 10:30 | 2109376 russwinter
russwinter's picture

The fact that the Troika isn't participating in the haircuts subordinates the private holders, and also makes the debt restructures inadequate. This policy is killing these insolvent bonds. 

Mon, 01/30/2012 - 10:35 | 2109397 battle axe
battle axe's picture

Portugal, brought to you by the good people of Greece. Next.

Mon, 01/30/2012 - 10:40 | 2109407 RiverRoad
RiverRoad's picture

Now the bond markets are starting to shoot first and ask questions later......

Mon, 01/30/2012 - 11:30 | 2109573 kanenas
kanenas's picture

Please do!

Wrong post to reply to!

Mon, 01/30/2012 - 10:49 | 2109447 DutchMadness
DutchMadness's picture

Come on, Germany, Netherlands and Finland. Time to leave the garlic-countries and their Euro shit, and start your own currency.

Mon, 01/30/2012 - 11:31 | 2109577 kanenas
kanenas's picture

Please do!

Mon, 01/30/2012 - 10:50 | 2109449 Hedgetard55
Hedgetard55's picture

Portugal makes excellent wine and sweetbread. What a shame. How did they come to this state? Too much socialismo?

Mon, 01/30/2012 - 10:58 | 2109492 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Economic mismanagement like all those insolvent countries. European states, US, Japan, China and etc......

Mon, 01/30/2012 - 11:05 | 2109510 onebir
onebir's picture

I don't get why the ECB isn't buying enough to contain the yields better...

Any ideas?

Mon, 01/30/2012 - 11:32 | 2109583 The 100 Trillio...
The 100 Trillion Dollar Man's picture

Merkel will make them sit on the naughty step if they try that,

Mon, 01/30/2012 - 11:10 | 2109524 spekulatn
spekulatn's picture

Macronomics from Sunday,

http://macronomy.blogspot.com/2012/01/markets-update-credit-great.html

Mon, 01/30/2012 - 11:54 | 2109667 Martin T
Martin T's picture

It is of no surprise to us to see Portugal taking center stage, following on current Greek negotiations with private bondholders (PSI). In fact we first noticed the decoupling between Ireland and Portugal in August last year in our post "Ireland June trade surplus - A glimmer of hope?":
"But, we are starting to see divergence between Portugal and Ireland, not only in the CDS 5 year space, but also in the 10 year government bond space:
Ireland 5 year CDS versus Portugal 5 year CDS, correlation was one and breaking since a couple of weeks."

Yep decoupling CDS wise happened way back last year, before that correlation between Ireland and Portugal had been one.

Mon, 01/30/2012 - 11:54 | 2109668 Martin T
Martin T's picture

It is of no surprise to us to see Portugal taking center stage, following on current Greek negotiations with private bondholders (PSI). In fact we first noticed the decoupling between Ireland and Portugal in August last year in our post "Ireland June trade surplus - A glimmer of hope?":
"But, we are starting to see divergence between Portugal and Ireland, not only in the CDS 5 year space, but also in the 10 year government bond space:
Ireland 5 year CDS versus Portugal 5 year CDS, correlation was one and breaking since a couple of weeks."

Yep decoupling CDS wise happened way back last year, before that correlation between Ireland and Portugal had been one.

Mon, 01/30/2012 - 13:00 | 2109983 mkanterm
mkanterm's picture

The date is June for two reasons. A) the CDS curve mimics Greece's as of 6 months ago and B) that June payment is 28% of GDP.

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