All of Europe is scrambling to issue new debt and refinance in advance of what more and more are seeing as a credit crisis soon to envelop not only the European periphery but its core as well. We all know what is happening in Greece and Portugal. It appears Italy may be next: the country sold €9.5 billion in 6 Month Bills at 0.814%, up dramatically from 0.568% just a month ago, on March 26. What is scariest is that the Bid To Cover on the auction tumbled from 1.56 at the previous auction to a just barely above passing 1.02. At this rate Italy will be unable to find bidders for its next Bill auction. And if it can't sell Bills, it can't roll the easiest part of its curve. Also, unlike Germany, Italy does not have the "flight to safety" appeal. Keep in mind that Italy, just like Greece, dipped freely in the Goldman debt/GDP swap "adjustment" mechanism. We are confident that as contagion fears grip Portugal, Italy is sure to be next. And confirming that the market is seeing Italy as an even greater risk than Spain, the country sold 1.7 billion euros of six-month securities to yield 0.736%, up from 0.482 percent on March 23. On the other hand, Spain has to sell €150 billion in euros in 2010: it has so far only sold 26% of this amount. We wish them best as they scramble to fill the quota.
Elsewhere, the Netherlands sold 1.1 billion euros of bonds due in 2023 and 300 million euros of 2012 notes today as Business Week reports.