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’The morning after the Irish bailout
Monday’s early price action:
New capital requirements for Ireland’s banks [updated]
Another €8bn needed, according to the Central Bank of Ireland to get core Tier One capital up to at least 12 per cent — with the possibility of more to come post the March 2011 stress test.
From the Prudential Capital Assessment Review (PCAR) released on Sunday evening (emphasis ours):
EU/IMF Irish bailout – the details
Here it is in all its gory detail
But first a few points of interest: there will be NO shortback and sides for senior bondholders; the four year plan has gone (it lasted all of four days); Ireland’s SWF is getting sucked dry,
Setting sights on senior (Irish bank) investors
Consider that senior debt sacred cow heading for the abattoir.
On Friday the Irish Times reported that officials’ sights had switched from sub-debt investors in Ireland’s banks — to senior ones. From the paper:
Beware the reflexivity of Irish bonds
Respected economist Paul de Grauwe, of Leuven University, has a big warning for the eurozone — on the back of the Irish and Greek sovereign crises.
According to him, it was the idea of a sovereign debt restructuring mechanism (or burdensharing for investors) proposed on October 18,
A de facto nationalisation of the Irish banking sector
The banking team at RBS have produced an excellent note on what Ireland’s quoted banks will look like post-recapitalisation.
And it makes for uncomfortable reading.
In order to bring common Tier 1 equity ratios up to 12 per cent on a Basel III basis as proposed by the EU rescue package,
Irish bailout *fail*
RTRS-IRISH FIVE-YEAR CREDIT DEFAULT SWAPS AT 530 BPS, 25 BPS WIDER ON DAY
And here’s a chart of that CDS movement, via Markit:
PORTUGUESE FIVE-YEAR CREDIT DEFAULT SWAPS AT 460 BPS, 39 BPS WIDER ON DAY – MARKIT
SPANISH FIVE-YEAR CREDIT DEFAULT SWAPS AT 281 BPS,
Irish exposure, charted
Courtesy of BNP Paribas, just who is exposed to Ireland and by how much:
Something which might come in handy as conditions for this weekend’s €80-90bn bailout are eked out.
Bailout live
Watch Cowen and Lenihan explain why they are taking IMF/EU cash.
Ireland to take the cash
Here’s Brian Lenihan interview with RTE in which he says Ireland needs a IMF/EU bailout loan — but not a three figure one.
More as we have it. Special cabinet meeting later on Sunday.
Thou shalt not bluff
As all eyes focus on what should be done about the Irish banking crisis, perhaps it’s time for the European Union, IMF and other related parties to take a closer look at some of the factors that may have exacerbated the problem.
That EFSF sense of urgency
Ireland may scream to the rafters that it’s funded until the second quarter of 2011 — but there’s a reason some eurozone leaders are pressing for it to tap Europe’s SPV.
The European Financial Stability Facility,
Standing up for Ireland ♣
The irony of Ireland moving swiftly to trim its budget deficit — and still ending up as the new centre of a European crisis — makes good newspaper fodder. But there is something rather unfair about the island’s current predicament.
The distorted European bailout
Some weird goings-on in the Irish yield curve.
(Nicked from Frankfurter Allgemeine — the Ireland curve is the brown-ish one)
Last week a jump in Irish two-year bond yields turned the whole thing rather hump-shaped.
The eurozone bailout fund: A Q&A
BNP Paribas analyst Ken Wattret has compiled a handy primer on the European Financial Stability Facility (EFSF), an appendage of the so-called European Stabilisation Mechanism.
The full note runs to seven pages and is available in the usual place.
Introducing the eurozone’s chief bail-out officer
The Economist totally beat us to coming up with a snappy job title for Klaus Regling, the man who took office on July 1 as the chief executive of the European Financial Stability Facility (EFSF).
(Recall:
The AIG e-mails, or, 250,000 pages of bail-out oddity
Currently sweeping the blogosphere: 250,000 pages of AIG-related emails.
The documents were released by the House Committee on Oversight and Government Reform in May, but have been helpfully sifted through and linked to by the New York Times.
Europe is Lehman-fied, part quatre
There have been more than a few comparisons drawn between the crisis in the eurozone and Lehman Brothers here on FT Alphaville. Here’s another, via Tullett Prebon Economist Lena Komileva.
Here are extracts from Komileva’s argument,
Ackermann’s curious Greek-speak
Attention Josef Ackermann: you’re confusing us.
According to a Reuters report on Thursday, the Deutsche Bank chief executive is not so sure that Greece will be able to repay its debts. He’s also somewhat skeptical about Portugal,
Now, about those DEM rumours
Sovereign CDS spreads have been tightening.
As have financials’.
Italy’s bond auction was a success.
Even Greek bond spreads have been relatively calm.
And yet…the euro keeps tumbling.
So what’s troubling the market?
For one thing,
Saving our bacon
Courtesy of Danske Bank, Monday’s action in porcine bond yields:
The analysts say that — contrary to some early confusion — Europe’s central banks did indeed start buying Greek, Portuguese and Spanish sovereign debt in secondary markets on Monday morning,
Guest post: El-Erian on a critical weekend for Europe and the economy
This is a critical weekend for Europe (and the global economy), with governments shifting to a “whatever it takes” mode as they scramble to regain control of the situation, Pimco’s chief executive Mohamed El-Erian writes for FT Alphaville.
Merkel’s calls for ‘orderly insolvencies’ threaten more disorder
There’s nothing quite like a crisis to expose the underlying cracks and fissures in both political systems and regulatory frameworks.
According to Bloomberg reports, Germany’s coalition government,
Spain’s PM decries market ‘madness’
Spain’s prime minister José Luis Rodríguez Zapatero sought to reassure investors on Tuesday as the country’s Ibex equity index fell and amid rumours of Spanish interest in a €280bn bailout. (Le Figaro reported on the chatter).
Reflections on the Greek melt down
It was hard to miss Greece’s blow-up in the debt markets on Thursday.
Well, where to from there? First up, it’s Deutsche Bank’s Jim Reid, who says these are pivotal weeks for the market:
The fact
CDS report: Peripheral panic
It was a record-breaking day in the sovereign CDS market, though not for reasons that any government would welcome. Spreads blew out on a day of unprecedented volatility. Greece was was at the epicentre,