Perhaps the most remarkable financial story this year has been the
reflation of the euro-zone periphery. While mainstream economists and
commentators have been hyperventilating about the possibility of
euro-zone deflation, the market has been quietly pouring money into
Southern Europe.
The stampede began in earnest in January when Bankia SA, a state-owned
Spanish lender cobbled together via the merger of seven failed savings
banks, successfully issued an unsecured bond.
Since then, Spanish and Italian 10-year government bond yields have
fallen to all-time lows, in Spain's case last week falling below 3% for
the first time. Portugal and Greece have regained access to bond markets
on sufficiently favorable terms for both to contemplate clean exits
from their bailout programs.
Perhaps most remarkably of all, Greek banks have been able to raise more
than EUR6 billion ($8.32 billion) in equity, with a further EUR2.5
billion planned. Last week's EUR2.9 billion rights issue by Eurobank
Ergasias attracted EUR7 billion of demand from a broad range of foreign
institutional investors, much of it from the U.S. Bankers now talk
excitedly of plans for a bond issue a week by Greek companies between
now and the summer. None of this was imaginable at the start of the
year.
Read more: Europe rides the reflation trade - MarketWatch
No comments:
Post a Comment