Fears are rising over the ability of governments to raise the vast amounts of debt they need to pay for economic stimulus packages and bank bail-outs.
Faced with the prospect of governments issuing a total of more than €2,000bn (£1,650bn) of bonds in the next year, bankers are warning of potential problems in meeting funding needs.
Roger Brown, global head of rates research at UBS, said: "Governments are already running into problems, which does not bode well so early after the recapitalisations and extra funding needs have been announced.
"We do have to ask whether there will be enough investors to buy the bonds, or at the very least over whether this will push yields substantially higher to attract them. Given the volumes involved investors may decide to wait and see if yields rise."
The rush of bond issues comes against a background of record low yields in some countries because of recession and fears of deflation. Last week, 10-year bonds in both the US and the UK fell to 50-year lows.
However, faced with contracting economies, lower tax receipts, and rising benefit payments, countries could face higher debt-servicing costs as overall debt levels rise.
The UK and Italy may face the greatest difficulties. The UK is expected to issue £10bn of bonds this month. In the past, monthly volumes have averaged about £2bn a month. The government is also expected to issue £60bn in the remainder of the financial year to the end of March - more than it would previously issue in an entire year.
In Italy, bond issuance could rise to €220bn next year, with €100bn in redemptions in the first half of the year - about €20bn higher than usual - putting the government under even more pressure to raise money.
Even in the US and Germany, which have the most liquid bond markets in the world, there have been some warning signs. In Germany, a bond auction failed last month, something virtually unheard of until this year, while in the US some analysts say yields could start to rise because of about $1,000bn (£650bn) in bonds in the pipeline next year.
It is significant that problems have emerged in auctions for shorter-dated securities, which are usually the easiest to sell. Last week, the UK and Italy were forced to pay higher yields to attract investors in bond auctions for four and three-year paper, respectively, compared with similar existing debt."
Adéu a Nihil Obstat | Hola a The Catalan AnalystDesprés de 13 anys d'escriure en aquest bloc pràcticament sense interrumpció, avui el dono per clausurat. Això no vol dir que m'hagi jubilat de la xarxa, sinó que he passat el relleu a un altra bloc que segueix la mateixa línia del Nihil Obstat. Es tracta del bloc The Catalan Analyst i del compte de Twitter del mateix nom: @CatalanAnalyst Us recomano que els seguiu.
Moltes gràcies a tots per haver-me seguit amb tanta fidelitat durant tots aquests anys.
dimarts, 2 de desembre de 2008
Qui rescatarà els rescatadors?
La borratxera governamental d'obrir més i més ampolles de plans de rescat comença a passar factura. La ressaca arriba més despresa del previst. Fins i tot, Alemanya o el Regne Unit comencen ja a tenir dificultats per obtenir préstecs per finançar els rescats i contenir el dèficit. Ho explica el Financial Times.
Publicado por NO a les 12:03 p. m.