It's Only Just Beginning In Europe As Principal and Interest Payments Rise From Here

It seems that Greece has managed to scrape together left-over medals from the Olympics and sell some fish in order to meet the interest payments so far but a closer look at the debt distributions - both interest and principal sends a worrying message. No wonder the Troika will be back in October!!

Greece has a EUR2bn zero-coupon bond due on 9/23 and a de minimus EUR13mm in interest payments due 9/30. From there it just gets ugly fast and that perhaps explains why 5Y Greek CDS just traded 66% upfront (and long-dated GGBs - the cheapest-to-deliver - are trading at EUR30/31!!). October sees EUR3.6bn of principal and EUR 1.17bn interest payments (with the first EUR2bn due on the 14th), EUR3.4bn total payments in November, and then the big daddy maturities in December - looks like the Xmas week might be a busy one this year (or will it all be over by then).

Italy has enormous principal and interest payments due:

Ireland has done a lot to push off its pain already but still faces some sizable payments in the next quarter or so with EUR1.2bn 10/18 and then EUR 4.4bn due on 11/11.

Portugal is similar to Greece in having aconsistent and large amount of principal and interest due in the next few months. EUR3.5bn principal is due 9/23 (same day as Greece) and EUR3.27bn principal due on 10/21.

and finally Spain which faces huge principal payments in October but only after covering around EUR7.5bn this week on 9/23!! EUR10bn is due on 10/21 and then a further EUR14bn on 10/31.

So, all-in-all, getting through today with all our expectations of a perfectly timed default in Greece is nothing compared to the next few weeks and the fact that Greece CDS widened, GGBs fell, and SovX widened today while equities hoped perhaps sends the message that is not being heard around the world.

Charts: Bloomberg