Spanish debt wilts amid €250bn rescue plan confusion

The Telegraph ^ | 6/16/2010 | Ambrose Evans-Pritchard

[bruinbirdman]

European debt markets remain under high stress on persistent reports that Spain is in secret talks with EU officials and the International Monetary Fund for a support package of up to €250bn (£208bn), the largest rescue in history.

Spain's finance minister Elena Salgado reacted angrily to reports in a Spanish newspaper that the plans
were well advanced

The spreads on 10-year Spanish bonds jumped to a post-EMU high of 224 basis points above German Bunds as traders brace for a crucial auction by Madrid on Thursday. The relentless rise in bond yields replicates the pattern seen in Greece at the onset of crisis. Spain must raise €25bn of debt in a cluster of auctions in July.

"We're in a dangerous and stressful situation," said Gary Jenkins, a credit expert at Evolution Securities. "Spain is a big enough borrower to wipe out the EU's rescue fund."

Elena Salgado, Spain's finance minister, reacted angrily to a report in the Spanish daily El Economista claiming that the support plans are well advanced.

"It has been denied by the Spanish government, by the European Commission, and by the IMF. How much more can we deny it?" she said.

The story refuses to die, however. Three German newspapers have run similar stories over recent days, citing German sources. The markets are convinced that some form of contingency planning is underway.

"In our view there is absolutely no doubt that a backstop facility for Spain will be put in place should stress in the system remain," said Silvio Peruzzo, an economist at RBS,

El Economista said officials from the EU, the IMF, and the US Treasury had been discussing a credit line of €200bn to €250bn, dwarfing the €110bn package for Greece. Dominique Strauss-Kahn, the IMF's managing director, reportedly called

[bruinbirdman]

In the EUSSR ponzi scheme, nothing financial is transparent.

[bruinbirdman]

"Spanish bonds jumped to a post-EMU high of 224 basis points (2.24%) above German Bunds. El Economista said officials from the EU, the IMF, and the US Treasury had been discussing a credit line of €200bn to €250bn"

2.5% over German interest rate is sinking Spain.

And The Obammunist's bagman, Geithner, is helping out. Remember, the emergency legislation negotiated with the entire congress gave the SecTres unlimited authority to help out his comrades, even in the EUSSR.

yitbos

[bruinbirdman]

Another reason TurboTax Timmy is bailing out his comrades:

yitbos

[gunsequalfreedom]

The New York Times did an excellent graphic showing the cross borrowing among European nations. It is one big scheme.

[gunsequalfreedom]

Here is something interesting. I’m no expert in this stuff but this...

30 Year Treasury 4.20% -0.71%

Who would tie up their money for 30 years at just 4.20 percent?

[bruinbirdman]

"Who would tie up their money for 30 years at just 4.20 percent?"

Someone buying real estate.

Does that give you an idea where to invest right now?

yitbos

[LjubivojeRadosavljevic]

"We're in a dangerous and stressful situation,"

Well, I'll just simply say it in nautical terms.

That is, Europe (financially) is in the middle of the sea on a rudderless ship.

[NVDave]

There’s serious misconception that a buyer of US Treasury debt has to tie up their money for the full duration of the bond. Since the US Treasury debt market is so liquid, you can buy and sell US Treasury debt every hour of the day, almost every day of the week. You can buy it when everyone is running for safety, pocket a little bit of a gain and sell it when you see another opportunity come along that would return more.

[gunsequalfreedom]

Thanks, that is very valuable insight. I definately had that misconception. I love FR. People on here are really great.