Spanish Bond Auction Results

Today’s Spanish bond auction is complete and while not technically a failure, the results were far from good, and indicate a continued contagion  of the southern Eurozone debt crisis.  The results:

  • Spain sold €1.2 Billion in 2 year bonds which priced at a 3.463% yield with a bid to cover of 3.28
  • Spain sold €1.42 Billion in 10 year bonds which priced at a 5.743% yield with a bid to cover of 2.42

Those who took down the offering are already underwater, as the 10 year has already sold off to 5.927%.
While a 5.743% yield may not seem like a complete failure, please keep in mind that a vast majority of the auction was monetized by the ECB.
QE must and WILL continue to INFINITY….AND BEYOND!!!


  1. Doc, I think that most of the money coming into the Sp bond sale is funding from LTRO as Eurobanks try to get a decent yield on their ZIRP cost funds from the IMF (US).  Maybe private investors are buying but no one in their right mind could invest in bonds that are absolutely certain to get a large haircut.

      I think this is the lull before the storm,  the eye of the hurricane.  But when the rates jump, as they most certainly will to 8% or higher,  those bonds will be underwater, further eroding the bank capital base.  Italy still has to refi about $200 billion in debt by year end so they are not out of the water. Spain is in horrible shape with 8% plus of bank loans in delinquent status so their capital bases will collapse.

    With the  Euro bank stress tests slated to begin May (I think) the are trying to get a quick boost to their capital with junk bonds from Spain and Italy if for no other reason that to stay on life support until the next bailout LTRO.  Once they get past some phony balony test like Ben and the Feds just gave our top banks( LOL), the doo doo will really start to hit the  fan and Spain defaults.   

    There was something that happened that got almost no press.  Portugal was bailed out.  How much did that cost?  It wasn’t on the radar as far as I could see. 

  2. Thw Lull before the storm AGXIIK? I think so too. Think about this: Yesterday, George Soros said “I no longer buy bonds but, if I did, I would short the Euro”. This is typical of the Soros economy killer. He says things like this in a nice way but he’s a killer of economies. If I’m right, I look for Spain to soon spiral heavy and be followed by the rest of the PIIGS.

  3.   10-4 on that 2OZ

    If that monster Soros could short the world to make money he would.  He’s probably short the dollar and telling Bernanke what to do.  Or maybe BHO.   Soros stiffed his girlfriend, a 20-somthing hottie, out a promised condo in NY.  He reminds me of Jabba the Hut. But shorting the Euro is dangerous. 

    Corzine, the biggest DA in the investment universe, bet the wrong way and JPM screwed him into the ground. So, as the Euro burns, my only concern is getting out of the way of this FUBAR.  It’s not often you get a ring side for the biggest Ponzi scheme.  This is epic  The historians will be writing about this for centuries.

  4. No doubt and good call. I don’t remember who, but, recently someone said “once the Euro crashes we have about 2 weeks to get out of all paper assets”. Sorry, but that’s a chance I’m not going to take. I’m out of everything except my 401K.


  6. WILD!

    Spanish Equity index (IBEX) deteriorating rapidly

  7. nice charts Jake!

  8. Spanish bonds are junk, but then again so are Japanese Bonds, German Bunds, US Bonds, and UK Gilts…not to mention the other uncreditworthy nations of the world

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