Spanish Borrowing Costs Jump at 2.5 Billion-Euro Bond Auction

Discussion in 'Wall St. News' started by ASusilovic, Feb 4, 2010.

  1. Feb. 4 (Bloomberg) -- Spanish borrowing costs rose at a sale of three-year notes on concern that the government will struggle to narrow its budget deficit.

    The government sold 2.5 billion euros ($3.5 billion) of the securities to yield 2.63 percent today, compared with 2.14 percent the last time the notes were issued on Dec. 3. The sale attracted 4.6 times as many bids as securities on offer, up from 1.72 at the last sale.

    “The focus is shifting toward Spain and Portugal where the deficit-reduction plans have been far less ambitious than Greece,” said Kornelius Purps, a fixed-income strategist in Munich at UniCredit Markets & Investment Banking.

    Spanish government bonds fell, pushing the yield on the two-year note up 8 basis points to 2.24 percent as of 10:42 a.m. in Madrid.

    4.6 times as many bids as securities on offer...ay, ay, ay..that's some healthy bids for being "worrisome" about Spain's debt situation..... :cool:
  2. i really wasnt convinced we had a RE button in spain last year and this year running deficits signal exactly that. with excess capacity and rising interest rates, the fiscal tightening in the coming years will drive those prices down drastically. not to mention unemployment rate of 20%. let us see if the iberian team doesnt enter the age of perpetual deflation that japan is tasting for the last 20 years.
  3. The bid-to-cover ratio is meaningless... The bond was absolutely spanked going into the auction, so it's not surprising to see cheeky low bids galore.

    After all, remember the Greek 5y auction the other day? Lots of bids (5x b/c, based on their original intentions), but we all know what happened then.
  4. dhpar


    100bps above germany is actually not that bad in these schizophrenic times...
  5. Don't know if any of you read but Tyler over there put together a custom index for all risky sovereigns: Spain, Turkey, UK, Portugal, Italy and Denmark.

    He calls it the STUPIDs. It's hilarious! :)


    "What all this means is that STUPIDity is now back to April 2009 levels, courtesy of the proprietary STUPID sovereign risk index. And rising. We expect STUPIDity to hit record highs soon enough. "
  6. I am not really sure what ZH's index is based on, although I'd assume it's 5y sovereign CDS. There's really no need for it, as there's something already. Specifically, the SovX series of indices. They are tradable and are used by everyone in the mkt.

    Besides, why the heck you'd bundle Turkey and Denmark together with Italy and Portugal is totally beyond me, unless it's for the sake of the acronym... If that's the case, I am inclined to think that ZH is a bit of a famous idiot. I guess I should go read what he says.
  7. dhpar


    nice acronym.

    one thing i do not get is that if everybody is really so scared and piles up into USTs especially when moving from other sovereign bonds then why e.g. gold does not go higher?

    after all we know US is in deep trouble too (as opposed to ausie loonie, kiwi and/or nok club. the only difference is the printing press....which i admit is the major one.
  8. dhpar


    because they start with T and D respectively. i do not see a problem with having fun sometimes...
  9. Sure, so it's just because it's a nifty acronym... But that would imply that there zero value in his actual index and the charts of it. 'Cause, by way of an example, Denmark and Turkey sov CDS have moved in the opposite direction relative to Italy and Portugal.
  10. ZH is a hangout for frustrated traders and college kids who find consolation in mutually whining about Bernanke, the US Dollar and Goldman Sachs. Don't waste your time.
    #10     Feb 4, 2010