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’Dexia’s collateral-crunching guarantee
It is an irrevocable, unconditional, direct, autonomous and first demand guarantee. The guarantee is joint but not several, and the allocation between the States (respectively 60.5, 36.5 and 3% for Belgium,
A Minsky moment in the eurozone?
Named after the economist Hyman Minsky, the phrase describes a situation where investors who have borrowed too much are forced to sell even good assets to pay back their loans.
– The Guardian, 2007
Snap news
Breaking pre-market news on Thursday,
- Dixons Retail reports lower than expected half year loss; however profits fall in Nordic division — statement.
- Philip Green’s Arcadia reports sharp fall in profits — report.
If you tolerate this, then your T-bills will be next
In the sound and fury of eurozone sovereign debt activity on Tuesday, we forgot to take note of Belgium’s auction of short-term T-bills.
It was not good.
It was really not very good:
Yields on both the three-month and 12-month paper sold reached three-year highs.
Belgium joins the spread-betting party
The lashing of non-Germanic eurozone sovereign bonds continues – but at a slower rate in Belgium’s case.
Just shy of its euro-era high of 273bp over comparable 10-year Bunds on Thursday, the country’s 10-year government bonds were trading at 268bp over at pixel time:
Undexia
DJ: DEXIA CEO: BANK TO REMAIN PUBLICLY TRADED
Update — speaking of zombies… Interesting to note that the €90bn 2011 edition of Dexia’s state guarantee bears a term of 10 years. The €150bn 2008 version guaranteed debt with a maximum maturity of three years.
Dexia garantie (encore) [updated]
RTRS-FRENCH, BELGIAN GOVTS, WITH CEN BANKS WILL TAKE ALL NECESSARY MEASURES TO SAFEGUARD DEXIA SA ACCOUNT HOLDERS, CREDITORS -FRENCH MIN
RTRS-BELGIUM AND FRANCE WILL GUARANTEE DEXIA’S FINANCING -FINMIN STATEMENT
(Chart via Scott Barber of Reuters)
There is already a patchwork of state guarantees within Dexia’s capital structure but this new statement is an important move.
Dexia en chute encore, encore
What’s French for penny dreadful?
(Centime horrifique? — Ed.)
Related links:
Crisis-hit Dexia running out of time – FT
Dexia en chute encore – FT Alphaville
Dexia en chute encore
Sauver le financement des collectivités, oui, sauver le soldat Dexia, non!
…Or Dexia, getting in trouble, again.
There’s a meeting between the French and Belgian finance ministers on Monday about its future,
Masochism
On the bright side, at least the ECB left more room to cut rates?
Chart via Rebecca Wilder and it’s more than a bit tongue in cheek. Correlation isn’t causation either. Although considering the state of the German economy over the same period…
E-bonds can work
Eurobonds, e-bonds, common sovereign debt issuance or whatever you want to call them are widely regarded as the solution to the Eurozone crisis. No less an authority that George Soros told us so this week.
Short-selling fairies
Charts via short-selling information specialists Data Explorers, incorporating a gauge of securities lending in both the financials currently subject to the short-selling bans, and in their markets.
Compare and contrast:
Dead cats bounce west
A chart to ruffle some sovereign CDS feathers, via Markit:
It’s a run-down of the ten best performing credits in the first three months of 2011, as contained in Markit’s new Sovereign Report. It blows away a few longstanding sovereign risk preconceptions – viz.
The incredible increasing EFSF
Remember the incredible shrinking EFSF?
Europe’s bailout fund had a nasty but predictable habit of decreasing every time another troubled eurozone peripheral hit it up for cash. But forget it — for now.
A guide to eurozone bond auction styles
How much do you want to know about eurozone bond auctions?
How much do you really want to know about eurozone bond auctions?
Given what we’d suggest is a highly premature rapturous reaction to Portuguese and Spanish sales of debt last week,
Belgian banks exposed to Belgium
Belgian bonds are blowing out.
Which means pain for any (unhedged) entity holding the stuff — for instance, Belgian banks. Citigroup attempts to quantify Belgian financials’ exposure to their host country in a Wednesday research piece — though it’s worth noting that they do reckon Belgium “is in a far stronger position than the [European] peripheral countries”
Go north, jaded government bond investor?
No, not north to German bunds. Further north.
Pär Magnusson and Filip Andersson — Scandinavian macro and fixed income analysts at RBS — have a few things they want to get off their chest at the moment,
Smouldering in Belgium
Portugal is loudly occupying bond markets as they look for the next bailout candidate. But its always the quiet ones you should watch out for.
So we’d suggest looking closer at how markets have repriced Belgian risk lately.
Sovereign CDS, un petit complexe de Napoléon
Should the Republic of France really be trading as a credit two notches above junk?
Five-year credit default swaps on the French sovereign were trading at 110bps at pixel time, according to Markit.
In other words:
The Belgians are still waffling
It’s Day 207 in the Big Belgium waffle house:
RTRS-BELGIAN GOVERNMENT MEDIATOR STEPS DOWN AFTER PROPOSAL FOR COALITION TALKS FAILS-PALACE
17:01 06Jan11 RTRS-BELGIAN GOVERNMENT MEDIATOR STEPS DOWN AFTER
Buiter: ‘European sovereign debt kerfuffle’
Just as New York turns cold, our old friend Willem Buiter goes and warms us right back up.
We posted some fairly bombastic extracts from Buiter’s sovereign debt crisis essay on November 30. And at a Citi roundtable event on Wednesday,
The corroding core
Belgium has six months. The rest of the eurozone core has a problem.
Standard & Poor’s didn’t shift the Belgian sovereign’s AA+ rating from a stable to a negative outlook on Tuesday for the usual reasons you might expect with,
Merkel-mouth
NEIN
– Angela Merkel on expanding the EFSF (paraphrased, via Alea)
Interesting to note that Spanish and Italian government bonds have drifted higher this week (and Belgium just won’t budge or back down).
Everything’s rising in eurozone peripherals…
… And not in a good way either.
On Wednesday, Portugal managed to sell all €1bn worth of its planned auction of three-month and 12-month bills. Yields, however, continued their inexorable rise.
The three-month bills were sold at an average yield of 1.818 per cent,