Irish Bond Auction Completed Courtesy Of ECB Backstops, As Europe Now Lives Paycheck To Paycheck And Auction To Auction

Today's market ripping false strawman (as if the ECB would let the Irish bond auction fail) was the issuance of €1.5 billion in 3.5 and 8 year bonds out of Dublin. And with yields a full percentage point higher than before, ECB backstopped banks using the newly purchased Irish bonds as collateral with the ECB, and/or the ECB picking up who knows how much itself, today's auction was a smashing success, if one can calls paying 6% for 8 year bonds success. But the market apparently loves ECB interventions so much it has tightened Irish CDS by 15 points on the day. Full results are as follows.

  • €0.5BN, 4% 15-Jan-14, bid/cover 5.1 vs. Prev. 5.4 (yield 4.767% vs. Prev. 3.627%)
  • €1.0BN, 4.5% 18-Oct-18, bid/cover 2.9 vs. Prev. 2.9 (yield 6.023% vs. Prev. 5.088%)

And now that that is over, the Irish NTMA says it plans to hold its next bond auction on October 19, when ECB backstopped banks and the ECB itself will make sure to set a low expectation hurdle, and let the market rip when they once again save the day. After all what is €1.5 billion for the ECB - the last time we checked the bank had directly and indirectly bought or backstopped just over €1 trillion worth of falling dominoes. What is amusing is that Europe is now literally living paycheck to paycheck, or auction to auction.

In the meantime, Anglo Irish default discussions are continuing, with creditors hoping to get just the same full ECB backstop treatment as the country itself.


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