Via Peter Tchir of TF Market Advisors [5],
Yesterday [6], 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.
[7]
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.
[8]
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.
[9]