Posted on 12/16/2010 2:08:26 PM PST by bruinbirdman
Spain had to pay a high price to get it last bond sale of the year away, with borrowing costs hitting a ten-year high as investors stayed on the sidelines until EU authorities clarified their approach to the Spanish crisis.
The government sold €2.4bn of the €3bn of bonds it had hope to sell on Thursday, with the average yield on the 10-year bonds coming in at 5.446pc and 5.932pc on 15-year bonds - around 20pc higher than previous auctions.
“The cost of funding for Spain rose significantly at this auction,” said Luca Cazzulani, a senior fixed-income strategist at UniCredit in Milan. “That reflected perceived deterioration of credit quality of Spain and that’s not going to bode well for their bonds.”
Interest rates at Spanish bond sales have soared in recent months amid market speculation the country may need emergency financial help because of its heavy debt burden and its slow recovery from recession.
The government has continually defended the economy, denied the need for help and says it is taking the necessary measures to handle its debt and trim its swollen deficit.
"When one looks at the bigger picture and considers the small amount sold, with low bid-covers, yet at a high yield, then it seems clear that peripheral markets remain under pressure and in need of support from policy makers," said Peter Chatwell, rate stategist at Credit Agricole in London.
The European Central Bank has been buying Portuguese bonds but not Spanish government debt, which is a much bigger market and would cost too much. The central bank is also worried that it is being drawn into fiscal rescues and is urging European states to do more.
Bond investors have been unsettled by the lack of unity in the EU about how to address the
(Excerpt) Read more at telegraph.co.uk ...
At this rate, Spain will soon think that ‘Payday’ loans are cheap.
Ah yes, just another pack of greenhead, economically illiterate enviro-marxists who have taken very little time to put their country into deep financial kaka. The irony of a bunch of spanish eurotrash marxists spending billions on windmills, windmills, I tell you, is priceless, no, it is exquisite. Mexican streetcar bonds, anyone?
So who tips over first? Spain, Ireland, Belgium, Greece, or a dark horse candidate?
California.
Interesting to see how the fiction of low interest rates has no bearing in reality. If even the rates for the government bonds are 5 and a bit percent, I’d imagine true interest rates running around 8 percent or so.
>So who tips over first? Spain, Ireland, Belgium, Greece, or a dark horse candidate?
Why do I suddenly have the urge to start the crowd chanting “USA! USA! USA!”?
[/gallows-humor]
I was gonna say Kali-fornia isn’t a foreign country, but that is not correct anymore.
I'm voting for the I-countries....
Italy & Illinois
>> dark horse candidate?
>I’m voting for the I-countries....
>Italy & Illinois
I’ll see your Italy & Illinois and raise you an India & Indiana.
;)
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