Chillin' out till it needs to be funded
While Spanish and Italian bonds are back in liquidity with yields for Italian bonds down to 1.2% for 6 months and 5.26% for 10 year bonds, just availability of quotes on the soveregns means that there are active buyers and sellers in the bonds and ECB need not intervene. Meanwhile just as GReece was off negotiating its debt, its ministers found the one sided austerity deal amore than a little stifling and while it needs more debt to create easierr finances and manage the economy for a sustainable “survival” not growth , the luxury it is out of for the next 10 years, t is not just a balanced budget for 2013 that is missing. It is the requirement of confidence in its debt without anyone trading it that is going to be the extreme monetary issue, leading to fiscal disasters..Last rating cut came as late as Valentine’s day, Moody’s rerating Portugal to Ba3, three notches below investment grade, with a negative outlook with all the chaos in Greece
Yields have fallen from 17% record levels to 14% levels but there are no signs that banks and Europe are interested in Portugal The irish on the other hand are doing better with their austerity program, with financing liquidity and even the blank mortgage collaterals that have gone thru to ECB in the first years.
Portugal however has qualified for its bailout conditions yesterday and that should be the reason for yields to now drive down to below 10% even with the new liquidity in the system as confidence in risky debt investments increases, more investors will realise on the non risky nature of Protugal being left high and dry. Portugal for all intents and purposes thus would be an example where without market making buyers and sellers have to agree to a common future which no one is even planning for the country to have as long as a Greek default is a unlikely / likely condition for the markets to debate. A sure fire problem of being part of a Fiscal docket or being stuck in a group with hiighly individualised problems and unfortunately, next door ireland will always beserved as an example of it getting done, without any observable comparisons to recreate in Portugal trading markets in High Finance
Inspectors from the bailout lenders — the International Monetary Fund, the European Central Bank and the European Commission — said in a statement that “Portugal is making good progress toward adjusting its economic imbalances.”
Though all three major rating agencies regard Portugal’s debt as junk it does not have that high a overhang of debt as the others and nor are its banks bankrupted
That assessment ensures Portugal will receive its next installment of €14.6 billion ($20 billion), bringing the total so far to €48.8 billion ($65 billion) after the country passed previous compliance tests, Finance Minister Vitor Gaspar said.
However both ireland and Greecee are doing the ECB textbook of the Fiscal Compact, following its leaders blindly on an agreed program that might even avoid a second serial failure. In that however, they have missed the boat to Financial sophistication like the farmers or the Working class one hears of. That feeling alone is enough to drive the nation’s polity to even if late, yet get European leaders (and lenders) back on the negotiating table for more flexibility in bailout terms.
Of course this is not fair to the depth of analysis the nation deserves but we will keep trying.