Italian bond sales 29th December '11:
"taly raised €7bn in four separate auctions after a successful short-term debt sale on Wednesday.
However, this was below the maximum €8.5bn sought and it also had to pay an interest rates on ten-year bonds that was close to the 7pc threshold that markets regard as "unsustainable" for a country with debts of €1.9 trillion.
The country paid 5.62pc to sell new three-year debt - a much lower yield than a high of 7.89pc paid only a month ago, but on 10-year bonds the yield only fell to 6.98pc from a record of 7.56pc at a sale in November.
Bond traders, who said they had seen signs that the European Central Bank had been buying Italy's bonds after the auction to hold down yields, said such high borrowing costs would keep pressure on Italy as it prepares to raise €450bn on the debt markets in 2012 - €53bn of it next month."
Italian prime minister Mario Monti urges united response to euro debt crisis as Italy scrapes through bond test - Telegraph
Seeing as Italy is probably in recession now how much longer can they afford nearly 7% on 10yr bonds. 450bn Euros to be renewed this year at an average of say 6.3%... You can do the maths yourselves to work out how much they have to cut the budget or face a shortfall. Of course the fear is that the markets see this and just work out that Italy cannot repay it's debts so effectively cut them off. This is what happened to Greece; they couldn't borrow commercialy so had to be 'bailed out'. For Italy to grow at 6-7% is beyond ANY New Year wish so this shortfall will have to be found in cuts... more recession and the vicious circle repeats itself.
Now that ECB had shored up the banks by providing €489bn in credit to banks (see Euroland euphoria on Mario Draghi bank rescue - Telegraph) maybe this would be a good time to cut the strings to Italy and the others before the whole lot comes crashing down.
"taly raised €7bn in four separate auctions after a successful short-term debt sale on Wednesday.
However, this was below the maximum €8.5bn sought and it also had to pay an interest rates on ten-year bonds that was close to the 7pc threshold that markets regard as "unsustainable" for a country with debts of €1.9 trillion.
The country paid 5.62pc to sell new three-year debt - a much lower yield than a high of 7.89pc paid only a month ago, but on 10-year bonds the yield only fell to 6.98pc from a record of 7.56pc at a sale in November.
Bond traders, who said they had seen signs that the European Central Bank had been buying Italy's bonds after the auction to hold down yields, said such high borrowing costs would keep pressure on Italy as it prepares to raise €450bn on the debt markets in 2012 - €53bn of it next month."
Italian prime minister Mario Monti urges united response to euro debt crisis as Italy scrapes through bond test - Telegraph
Seeing as Italy is probably in recession now how much longer can they afford nearly 7% on 10yr bonds. 450bn Euros to be renewed this year at an average of say 6.3%... You can do the maths yourselves to work out how much they have to cut the budget or face a shortfall. Of course the fear is that the markets see this and just work out that Italy cannot repay it's debts so effectively cut them off. This is what happened to Greece; they couldn't borrow commercialy so had to be 'bailed out'. For Italy to grow at 6-7% is beyond ANY New Year wish so this shortfall will have to be found in cuts... more recession and the vicious circle repeats itself.
Now that ECB had shored up the banks by providing €489bn in credit to banks (see Euroland euphoria on Mario Draghi bank rescue - Telegraph) maybe this would be a good time to cut the strings to Italy and the others before the whole lot comes crashing down.
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