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“Appetite For Spanish Paper Is Alive.”

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http://www.bloomberg.com/news/2010-07-15/spain-sells-all-bonds-on-offer-at-auction-before-largest-debt-redemption.html

Spanish Bond Sale Eases Funding Concern
By Emma Ross-Thomas - Jul 15, 2010
Spain's deputy finance minister Jose Manuel Campa. Photographer: Daniel Acker/Bloomberg
Investors bought all 3 billion euros ($3.8 billion) of 15-year bonds offered by Spain, with demand strong enough to ease concern the nation would struggle to cover debt payments after Greece’s bailout.
“The Spanish auction went well,” said Chiara Cremonesi, a strategist at UniCredit Research in London. “Appetite for Spanish paper is alive.”
Spain, which has to repay 24.7 billion euros of debt this month, has the third-largest deficit in the euro region and its banks are dependent on the European Central Bank for funds. Prime Minister Jose Luis Rodriquez Zapatero risks losing power as he pushes through austerity measures, including cutting workers’ wages, freezing pensions and reducing severance pay.
Today’s auction raised the maximum offered at an average yield of 5.116 percent, compared with 4.434 percent at a sale of the same securities on April 22, the Bank of Spain said. Demand was 2.57 times the amount sold, compared with the bid-to-cover ratio of 1.79 in April. Spanish bonds rose and the euro strengthened.
The government is hoping the publication of stress tests next week will allow its financial institutions to access capital markets.

Notice that the question is not whether the banks will pass the stress tests but how much money they will have access to after the assumed good results are published. The fix must well and truly be in--the stress tests are just a sham.

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I remember reading somewhere that the market possesses only two types of memory - no memory and short term memory.

Obviously all that sovereign debt crisis stuff is now all over and done with.

Cannot say I'm enjoying this Euroland 'recovery' as my big pile of Dollars are hurting badly due to Sterling riding on the back of the Euro rally.

Personally I believe what is happening in the US right now is a future glimpse of where a lot of countries are heading, including the UK, as not of the issues from the so called 'credit crunch' have been fixed.

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I remember reading somewhere that the market possesses only two types of memory - no memory and short term memory.

It's the electronic revolution. People feel they can move before their jaw hits the table - so they stay put.

An aspect of the financial world that I feel some people forget.

We have just lived through a technological revolution in the last 20 years - yet little mention is made of it.

Edited by Alan B'Stard MP

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I remember reading somewhere that the market possesses only two types of memory - no memory and short term memory.

Obviously all that sovereign debt crisis stuff is now all over and done with.

It is all an illusion.

You can not tell what the markets are thinking due to all the intervention. With the central banks buying bonds even if they don't buy them directly they can get the banks to buy them then the ECB can do what the FED was doing all last years and buy the bonds of the banks through their special facilities. Sometimes the FED was buying bonds back from 'investors' hours after the original purchase.

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http://www.bloomberg.com/news/2010-07-15/spain-sells-all-bonds-on-offer-at-auction-before-largest-debt-redemption.html

Spanish Bond Sale Eases Funding Concern
By Emma Ross-Thomas - Jul 15, 2010
Spain's deputy finance minister Jose Manuel Campa. Photographer: Daniel Acker/Bloomberg
Investors bought all 3 billion euros ($3.8 billion) of 15-year bonds offered by Spain, with demand strong enough to ease concern the nation would struggle to cover debt payments after Greece’s bailout.
“The Spanish auction went well,” said Chiara Cremonesi, a strategist at UniCredit Research in London. “Appetite for Spanish paper is alive.”
Spain, which has to repay 24.7 billion euros of debt this month, has the third-largest deficit in the euro region and its banks are dependent on the European Central Bank for funds. Prime Minister Jose Luis Rodriquez Zapatero risks losing power as he pushes through austerity measures, including cutting workers’ wages, freezing pensions and reducing severance pay.
Today’s auction raised the maximum offered at an average yield of 5.116 percent, compared with 4.434 percent at a sale of the same securities on April 22, the Bank of Spain said. Demand was 2.57 times the amount sold, compared with the bid-to-cover ratio of 1.79 in April. Spanish bonds rose and the euro strengthened.
The government is hoping the publication of stress tests next week will allow its financial institutions to access capital markets.

Notice that the question is not whether the banks will pass the stress tests but how much money they will have access to after the assumed good results are published. The fix must well and truly be in--the stress tests are just a sham.

"Appetite for Spanish Paper is Alive"

Phew. Just read the article.

I thought at first things must be REALLY bad down on the Iberian peninsula.....

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Spanish housing boom was worse than the one in the US. Why have prices not dropped in Spain much. Massive write downs still to come, I would not touch Spain.

At least in the US they try to flush the system. In Europe it is much more covered up.

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Spanish housing boom was worse than the one in the US. Why have prices not dropped in Spain much. Massive write downs still to come, I would not touch Spain.

At least in the US they try to flush the system. In Europe it is much more covered up.

This is why the US rebounds faster than anyone else.

I am not so sure that Spanish house prices are holding up. My sister lives on the Costa Blanca and reports some heavy drops going on there.

We are the only Western country not to see a correction of at least 20% down. Or, at least, we haven't admitted to it even though flats up north have seen 50% or more off.

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The big Spanish cities have only seen official falls of 20% from peak, while the costas/provinces have generally seen much bigger falls. I think this is for the following reasons:

Work in Spain is very concentrated in the big cities, and perhaps with the collapse of the "Costa Ladrillo" even more people are looking to move to them, thus propping up prices more. People actually still have jobs in Madrid, while many of those who've lost work on the costas were immigrants who didn't own houses anyway.

Everybody in Spain has a tracker mortgage of about 0.5% over the euribor, so it ain't hurting too much yet.

The surplus new-build housing stock in Spain isn't actually on the market (it's owned by the banks and not marked to market) so it's not really pushing prices down as much as people expected

The Spanish government has always used tax incentives to encourage people to buy property. I expect there to be a big crash next year when these incentives are removed. Also the Bank of Spain is now trying to force the banks to mark to market by threatening to devalue any property that has been on the their books for over a year by up to 50%.

The official stats are not telling the true picture.

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http://www.bloomberg...redemption.html

Spanish Bond Sale Eases Funding Concern
By Emma Ross-Thomas - Jul 15, 2010
Spain's deputy finance minister Jose Manuel Campa. Photographer: Daniel Acker/Bloomberg
Investors bought all 3 billion euros ($3.8 billion) of 15-year bonds offered by Spain, with demand strong enough to ease concern the nation would struggle to cover debt payments after Greece's bailout.
"The Spanish auction went well," said Chiara Cremonesi, a strategist at UniCredit Research in London. "Appetite for Spanish paper is alive."
Spain, which has to repay 24.7 billion euros of debt this month, has the third-largest deficit in the euro region and its banks are dependent on the European Central Bank for funds. Prime Minister Jose Luis Rodriquez Zapatero risks losing power as he pushes through austerity measures, including cutting workers' wages, freezing pensions and reducing severance pay.
Today's auction raised the maximum offered at an average yield of 5.116 percent, compared with 4.434 percent at a sale of the same securities on April 22, the Bank of Spain said. Demand was 2.57 times the amount sold, compared with the bid-to-cover ratio of 1.79 in April. Spanish bonds rose and the euro strengthened.
The government is hoping the publication of stress tests next week will allow its financial institutions to access capital markets.

Notice that the question is not whether the banks will pass the stress tests but how much money they will have access to after the assumed good results are published. The fix must well and truly be in--the stress tests are just a sham.

As someone who has never bought a bond (apart from a Premium Bond) - why is there an 'average' yield. I thought that when government bonds were sold they were sold at face value e.g. buy a 2020 £100 bond with a coupon of 4% and you get 4% for 10 years and then your money back.

As this was an auction - people bid for the bonds? They bid over the face value? Or under? Wonder what the coupon on these bonds is and whether investors paid over face value and got less yield than the coupon or the other way round?

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As someone who has never bought a bond (apart from a Premium Bond) - why is there an 'average' yield. I thought that when government bonds were sold they were sold at face value e.g. buy a 2020 £100 bond with a coupon of 4% and you get 4% for 10 years and then your money back.

As this was an auction - people bid for the bonds? They bid over the face value? Or under? Wonder what the coupon on these bonds is and whether investors paid over face value and got less yield than the coupon or the other way round?

I could be wrong, but i think the answer is 'both' hence the 'average yield'

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As someone who has never bought a bond (apart from a Premium Bond) - why is there an 'average' yield. I thought that when government bonds were sold they were sold at face value e.g. buy a 2020 £100 bond with a coupon of 4% and you get 4% for 10 years and then your money back.

As this was an auction - people bid for the bonds? They bid over the face value? Or under? Wonder what the coupon on these bonds is and whether investors paid over face value and got less yield than the coupon or the other way round?

The coupon was 4.65%.

This is an auction so the Spanish say coupon 4.65% face value 1 euro and it will redeem at 1 euro in 15 years time. Then the people that want to buy put there bids in at lower than 1 euro say 96c or 95c seeing as there are multiple bidders then there are multiple prices.

At the end when the offer is sold out they publish the average yield (because sold at different price to different bidders) and this was 5.116 so the average price paid was

90.89c if my maths are correct.

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  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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