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Spain's 10-year bond yield soars 34 bps to 5.64%, the highest since late November, and nearing...

  • Monday, May 14, 2012, 7:24 AM ET
    Spain's 10-year bond yield soars 34 bps to 5.64%, the highest since late November, and nearing its all-time high. The 2-year +34 bps to 4.08%, the highest since mid-December. It has risen nearly 200 bps since the ECB's 2nd LTRO, leaving Spanish banks with massive losses on the 2-year paper they purchased with the cheap funding. Madrid -2.8%, Santander (STD) -3.5% premarket.
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This news story has 3 comments:

  •  
    Wouldn't that also leave the ECB with massive losses since the paper that is losing is pledged as collateral?
    14 May 2012, 01:00 PM Reply Like
  •  
    Margin calls! That will put even more pressure on Spanish banks. LTRO's nasty side effect of shackling banks to the sovereign debt of of their home nation may have made things worse in the long run.
    14 May 2012, 01:30 PM Reply Like
  •  
    Imagine if the ECB made them pay back their advances. Where are they going to get the funding to replace the ECB advance. They can't sell the paper for what the advance is worth, so they would have to raise deposits, which means offering higher rates. So now, on top of credit losses, their net interest income goes down as well.
    14 May 2012, 01:34 PM Reply Like
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