Greek CDS Jump As Books For New 7 Year €5Bn Issue Covered Just 1.4 Times, Greeks Blame Weak Demand On Easter

Greek CDS are moving 10 bps wider from 293 to 303 bps as demand for the bailed out country's bonds was much weaker than expected. Greek weakness is spreading to other European countries: The cost of protecting other euro zone government bonds from default were also mostly higher. The German 5-year credit default swap rose to 30.1 bps from 28.9 bps. In the meantime, and in keeping with the Greek tradition of scapegoating, the very weak demand for the new 7 Year issue was blamed on... Easter.

From Reuters:

  • Greece to sell 5 bln eur bond, demand softer
  • Greece taps market with 5 bln eur, 7-yr bond issue
  • Orders about 7 bln, well below March 10-yr sale, leads say
  • Needs to borrow 16 bln by May to refinance maturing debt
  • Lead source blames Easter holiday for weaker demand

The recently auctioned off 10-Year bond saw preliminary demand of €16 billion. The current order book is just 1.4x covered, at barely €7 billion in demand. Further, as Reuters also points out:

About 175 institutions bid for a slice, sources at the lead managers said, compared to 400 investors for the 10-year issue.
"It is Easter week in Greece and Europe and this explains why demand may seem a bit softer, with the book growing at a slower pace compared to the previous 10-year bond issue," said a source at one of the five banks leading the issue.
Guidance on the bond was set around mid-swaps plus 310 basis points, sources at the lead underwriters said, still around levels which Greek officials have said are "unsustainable" for the state's finances in the long run.

Maybe the BLS can also blame Easter/Passover/2012 Mayan Apocalypse expectations if a sub-300k NFP number materializes this Friday. And back to reality, as we discussed yesterday, if even with every possible guarantee imaginable Greece can't cut the yield demand on new paper to sub-6%, it is pretty much, as Evans-Pritchard notes, the beginning of the end for the Greek voyage on the capital markets Titanic.


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