Not just two years. Now it’s three years.
In terms of peripheral bond maturities that are coming under pressure this week, that is. Debt restructuring pennies dropping?
The FT’s James Mackintosh pointed us towards heavy selling in Greek, Irish and Portuguese three-year bonds early on Friday.
Later on Friday — well, look at the intraday yield charts:
Where’s the ECB, we wonder?
By contrast, there’s no yield pain, or spikes, in Spain’s 2014 bond. Unlike Spain, the three ultra-peripherals have become really very illiquid bond markets, where single big trades can matter. It looks like Friday’s price action was pretty linked.
So, is it more nervousness over debt restructuring? We strongly suspect so. There’s a real tussle over the immediate future of the European Financial Stability Facility (effective until 2013) at the moment, because Germany is against increasing its role unless a fresh round of austerity is arranged around the periphery.
No flexible EFSF — no real chance of buybacks, collateralisation, and other creative solutions to peripheral debt problems.
And without some kind of solution, it’s going to be more than investors in the 2013 and 2014 bonds who end up paying.
Related links:
Meanwhile in Europe… – FT Alphaville
Portugal unveils tougher austerity measures - FT
Portugal, a broken debt market – FT Alphaville