BTP AUCTION, THE TREASURE CHALLENGES THE BEAR
ON THE TABLE OF MONTI THE TREMONTI BOND FOR MPS
It's hard to imagine a worse setting for month-end Treasury auctions. Starting this morning, the Italian Treasury will take the field with: placement today of 3 billion Ctz in addition to Btp maturing in 2016 and 2026. On June 27, 9 billion will be placed 185 days bot, on June 28 it will be the turn of a series of fixed-rate issues (5 and 10-year BTPs for a total of between 4 and 6 billion) and variable.
The euro is weak and fell to 1,247 against the dollar, from 1,257 at Friday's close.
On the government bond market, the yield of the ten-year BTP rose to 5,98% from 5,77% on Friday evening, spread with the Bund at 452 (+32 basis points). Spain, meanwhile, jumps to 512.
News, when it's really bad, comes down like hail. Yesterday, to dye black the moods of the eurozone contributed:
a) German Chancellor Angela Merkel's resounding no to apparently "easy" solutions to solve the crisis in the eurozone, including the mutualisation of debt to which was added the no of Ewald Nowotny, an Austrian member of the ECB of the ECB, to purchases of Italian and Spanish bonds by the central bank.
b) The downgrading of the ratings of 28 Spanish banks, including BBVA and Banco de Santander, by Moody's
c) The official request for aid made by Spain and, a few hours later, also by Cyprus.
d) The resignation of the new Greek finance minister.
But these "pills", already negative, become dramatic because among investors the conviction is gaining ground that the next European Council on Thursday 28 and Friday 29 June, on which last-ditch tension is mounting, will close without concrete decisions but only with generic declarations of intent, without setting the first, indispensable stages of the road map for political union dear to Merkel, which also require an initial investment. In this case, George Soros reiterates, it would be the end of the euro. Europe, then, would go the way of the old USSR.
Not surprising, given the context, the ruinous day for Piazza Affari and the Madrid Stock Exchange which closed with falls of 4% (FtseMib index) and 3,7% (Ibex index) respectively. Strong declines also for the other European Stock Exchanges: Paris and Frankfurt respectively fall by 2,2% and 2%, London -1,1%.
In a certain sense, the news makes more impression than the storm arriving from Europe has canceled on Wall Street the positive effect of the US data on the sale of new homes in May which rose to 369 thousand units with an increase of 7,6% on the previous month. The Wall Street indices mark: Dow Jones -1,09%, Standard & Poor's 500 -1,60% and Nasdaq -1,95%.
The decline continued in Asia this morning: Tokyo -0,84%, like other Asian price lists with the exception of Hong Kong -0,01%.
The euro is weak and dropped to 1,247 against the dollar, from 1,257 at Friday's close.
On the market of government bonds the yield of ten-year BTP rose to 5,98% from 5,77% on Friday evening, spread with the Bund at 452 (+32 basis points).
The biggest losses in Europe and Italy came from the banks. The Stoxx index of European banks fell by 3%. In Piazza Affari Unicredit lost 8,4%, PopolareMilano -8,3%, Banco Popolare -6,9%, Intesa fell by 6,5%.
The Monte Paschi dossier -7% to 0,20 euro arrives this morning at the Council of Ministers. To reopen the window of the Tremonti bond (or similar roads) an intervention of Palazzo Chigi will be necessary. The Sienese bank, as is known, must present a plan by 30 June to recapitalize the institute according to the requests of the European authority, the EBA. To reach the goal, 3,3 billion, at least one is missing, after the sale of Biverbanca. At this point, it seems obvious that Fabrizio Viola and Alessandro Profumo have discarded the market solution, which is completely impracticable given the current situation. Hence the Tremonti bond hypothesis, already requested (and not yet repaid) in 2009 for an amount of 1,9 billion. A demanding choice: in 2013 the Tremonti bonds will have to pay a yield of 9%, which is equivalent to an annual drain of 260-270 million, a coupon which however can be suspended if the bank does not distribute returns. But also an obligatory choice for the executive: MPS, with its 25 billion of government bonds in hand, is the bank most exposed to Italian debt.
In France BnpParibas lost 5,1%, in Frankfurt DeutscheBank fell 3,8%, the Spanish banks BBVA and Santander they fell by 5,4% and 4,3% respectively.
Today the board of directors of Fonsai is called to deliberate the liability action and interventions to recover the amount paid to the Ligresti for a series of operations deemed irregular by Isvap. To comply with the authority's indications (and under the threat of being placed in receivership) a committee of wise men for the new governance has already been launched which will have to propose "high-profile" figures to be co-opted to the top. The most accredited presidential candidate seems to be Fabio Cerchiai, now president of Febaf, the federation of Abi, Ania and Assogestioni.
Industry stocks are also bad, starting with Finmeccanica which recorded a loss of 5,8%, Fiat -4%, Fiat Industrial -3,4%. They haven't fared any better Pirelli, which dropped 3,1%, and StM , down 3,9%.
Also declining oil and utilities: Eni is down 2,6%, Saipem -2,9%.
Fears of an economic slowdown weigh on the Petroleum: WTI fell 1,9% to 78,1 dollars a barrel. Brent down 1,3% to 89,7 dollars.
Enel lost 3,3%, A2A fell by 7%.
Telecom Italy it finished down 3,8%.
Between the blue chips of Piazza Affari, only Diasorin closed positive with an increase of 1,2%.
