Bottling threat on the debt in Europe market

Bottling threat on the debt in Europe market. This risk will continue to soar, while the States and the private sector (especially banks) must make many papers.

For the time being, despite a force boot, emissions are well absorbed. On sovereign debt, the France yesterday awarded titles EUR 8.9 billion to 10, 15 and 20 years for his first show of the year. The day before, the Germany and the Portugal (on short-term debt) have also been active, and a new player: European stability mechanism, which throws the debt to support the Ireland.

Companies and the financial sector have not been forgotten: APRR (Autoroutes Paris-Rhin Rhône) came for the second time in its history on the market, with a program of EUR 1 billion of bonds to 6 years in the "mid swap" rate 245 basis points - at the bottom of the advertised range - while RCI Banque, the Renault financial industry has raised 750 million euros of securities in 3 years at a rate "mid swap" 150 points. "The automotive groups lose no time, they borrow as much as they can while there is an opening of the market, to address their important financing needs," says Suki Mann in Société Générale. The strategist also expects other operations of the constructor to the diamond as well as Peugeot. At the beginning of week Volkswagen for its part lifted EUR 1.25 billion.

Influx of "covered bonds".

It is on the Bank that the flow is faster in the beginning of this year. Under the form of secured bonds (or "covered bonds") including. These paper issued by financial institutions are backed mortgage or loans to communities. Agricultural credit, SBB UniCredit, ABN AMRO, Santander, BPCE, Lloyds, Dexia Kommunalbank and Banco Popolare have started or are about to do so. Approximately 7 billion euro were thus already placed.

Banks also enable the segment bond said "senior" (priority claims for repayment, Editor's note). Société Générale including placed EUR 2 billion of securities to 2 years, at a rate (variable) Euribor 3 months 55 basis points. Intesa Sanpaolo and Rabobank were borrowed respectively 750 million in 5 years and EUR 2 billion in 10 years. "With these transactions, there was the liveliest session for months on the primary market", said Suki Mann.

This makes fear competition unsustainable debt of the banks and the States, as the two are by their nature intimately linked. The European Central Bank (ECB) had reported this danger for 2011. "The main concern on the Spain where the amounts of Bank refinancing market debt are high in the first half", indicates the team of RBS, who believes that EUR 55 billion expire before July. In the face, the Spanish State should honour a first payment of not less than 16 billion euros in May. Throughout the year, the Iberian banks must refinance 86 billion and the State 45.

Another threat to the levees of bank debt, orderly bankruptcy rules to the sector are to be debated. If the holders of securities issued by financial institutions must suffer losses (via a haircut on the nominal value), the appetite for these papers will melt. Yesterday, pending the launch of a consultation on the subject by Brussels, CDS (credit default swaps") of the banks are gone, in defiance of investors.