There was a time when foreigners couldn't get enough of Spanish debt, and as shown in the chart below sourced from the Bank of Spain [3], non-residents, aka International Holders, couldn't get enough of Spanish paper with their total holdings rising well over half of total debt outstanding as recently as 2010.
[4]
Then the first European crisis happened and peripheral bonds cratered, sending Spanish yields to record high yields and bringing international holdings of Spanish debt to the lowest in the 21st century just as Mario Draghi unleashed his "whatever it takes" hollow round bazooka and the non-existent OMT, which marked the top in yields so far.
Since then it has been a non-stop buying frenzy, and after bottoming in the low-30%'s in 2012 and early 2013, foreign holdings of Spanish debt have once again shot straight up until, moment ago, we learned courtesy of the latest Bank of Spain update that as of February, International investors once again hold a majority of Spanish debt, or 50.5% to be precise, in the form of €333.5 billion of the unstripped Spanish government bonds of the total €660.4 billion.
[5]
This latest herd scramble, which has certainly pushed foreign holdings of Spanish paper well over 50% in the past month, means that headlines such as this one from Bloomberg:
- Spain Sells EU0.725 Bln of 6-Month Bills; Yield -0.002%
- Spain Auctions T-Bills With Yield Below Zero for First Time
Will become far more frequent and spread increasingly to the right of the curve, until the entire cycle restart from the beginning.
Source: Bank of Spain [6] [6]
