GREECE, THE DEFAULT FEAR ADVANCES
YIELDS UP FOR THE BOT AUCTION
The Milan Stock Exchange confirms the heavy drop after the bot auction in the morning which showed rising yields. The Ftse Mib lost 3,69% to 13.503,07 points, however traveling slightly above the intraday low of 13.442 points. Even worse, Paris which loses 4,23% and while Frankfurt retreats by 3% and London by 2,11%. Fears over the Greek debt situation and the Eurozone crisis weighed on the lists in the light of the continuing divisions in the EU but also within the ECB with the resignation on Friday of the German Jurgen Stark, member of the executive committee, and the rumors about the existence of a plan B for Germany in the event of a Greek default.
Today the weekly Der Spiegel writes that Wolfgang Shauble, German finance minister, would have elaborated scenarios that foresee the default of Greece by entrusting the European Financial Stability Facility (EFSF) with the key role of avoiding the spread of investor distrust in Italy and Spain after the Greek default through preventive credit lines to the two countries. A survey by the Emnid company published yesterday shows that over half of Germans are against providing further financial aid to Greece and would prefer the country to go bankrupt.
Over the weekend, the Athens government announced a new extraordinary tax on real estate, with the aim of raising 2,5 billion euros and thus meeting the deficit reduction target agreed with the EU and the IMF. Greece's 21,15-year government bond yields set a new record with the rate rising to 1,3499%. The euro falls to a six-month low against the dollar at 10 and a 104-year low against the yen close to 11,5. On the Italian front, the good news is that despite the strong tensions, the Treasury managed to place XNUMX billion BOTs at three months and at one year. But it had to offer higher returns.
In detail, for the 1-year tranche (from 7,5 billion), the rate rose to 4,153% from the 2,959% of the August issue. For the 3-month tranche (from 4 billion) it rose to 1,907% from 1,034% at the March auction. Demand is also slowing down: the bid-to-cover ratio was equal to 1,53 on 1,94-year Bots (1,86 the previous one) and 2,42 times (3 the previous one) on 381-month Bots . The appointment is now for tomorrow's Btp auction. The spread with the bund, which had risen to 375 basis points in the morning, now remains around 500 but the CDS on Italy have exceeded the threshold of 505 basis points for the first time at XNUMX.
BANKS UNDER PRESSURE
DOWNGRADE FEARS FOR FRENCH INSTITUTES
Sales on the ESF Mib hit the banking sector with Unicredit losing 7,6%, Intesa 6,51%, and also insurance companies with Fondiaria Sai losing 6,74% while Generali lost 2,56% . But once again sales also hit industrialists: no stock on the main index is saved from declines. Among the worst stocks still Fiat (-4%) and Fiat Industrial (-5%) but also on Buzzi Unicem (-5%). Enel (-3%) and Eni (-3,07%) also dropped sharply, leaving Ubs' list of favourites.
The lenders sector is under pressure across Europe due to fears of contagion risk over the possible default of Greece and after the news that Moody's could cut the rating of French institutions. Socgen, which specified in a note that its exposure to Greek debt amounts to around 900 million, lost 9,60%, Bnp Paribas 13,04% and Crédit Agricole 8,92%.
