Britain May Revive Perpetual Gilts
Everything old is new again–Britain is considering bringing back perpetual gilts, long-term bonds that were first debuted after the South Seas Bubble crisis of 1720. With 100-year maturities and today’s extra-low interest rates, the idea is attractive to many.
Spain Faces Tough Haul
Already mired in debt and unemployment, Spain has been told that the target deficit rate of 5.8% of GDP that new Prime Minister Mariano Rajoy declared only 10 days ago is inadequate, and Madrid must seek a faster reduction in its deficit.
German Concern over ECB Funding Grows
Germany is getting worried–more worried than usual–about the level of debt in the eurozone. The European Central Bank’s Target2 system indicates that money owed to the Bundesbank now totals 489 billion euros ($656 billion
Belgium Deepens Austerity Cuts
Belgium has committed to reduce its public sector deficit to 2.8% of GDP in 2012, from its 2011 level of 3.8%. If it fails to cut its deficit to a level of a maximum of 3%, it could face fines imposed by the European Union.
Greece Gets 95% Participation in Debt Swap
Greek Finance Minister Evangelos Venizelos was quoted saying, “The debt-swap results show that international markets see the prospects the Greek economy has to regain a sustainable fiscal situation.”
Greek Debt Swap Success Called Likely
Enough holders of Greek sovereign debt have now signed on to the debt swap deal that is a prerequisite for a second bailout that success seems likely. However, there is still a chance that collective action clauses may be triggered.
Big Banks Join Greek Debt Swap
By Thursday Greece must win over the rest of the participants to exchange new bonds for old, or it will invoke collective action clauses to compel additional bondholders to participate. The target is to reduce the country’s privately held debt of 206 billion euros ($270 billion) by 53.5%.
Portuguese Bond Yields Rise
Portugal may be in need of a second bailout–or so it seems from its sovereign bond yields, which have risen steadily despite a flood of cash from the European Central Bank that is flowing to other investment targets.
ECB’s Trillion-Euro Giveaway Offers Limited Time for Reform: News Analysis
The ECB’s liquidity lifeline to banks—like America’s QE policy—offers a chance to avoid a deeper economic depression, but only if that window of opportunity is used to make sustained structural reforms that policymakers on both sides of the Atlantic have so far avoided.
CDS Not Triggered by Greek Bailout: ISDA
The bailout of Greece involving an exchange of sovereign bonds did not constitute a credit event and therefore need not trigger credit default swaps to pay creditors, according to the International Swaps & Derivatives Association.