Reply to: ULTRA-DOOM!!! Italy's 10 year bond rate breaches 7%

[Freamon]

But isn't alot of it held by (Italian) private individuals rather than banks? Will they stay loyal?

Lots of Italians have already started moving their savings abroad.

[BrilloPad]

Italy's sovereign debt has a fairly short maturity profile - they have to roll over 310 bn during 2012.

But isn't alot of it held by (Italian) private individuals rather than banks? Will they stay loyal?

[centurian]

Italy's sovereign debt has a fairly short maturity profile - they have to roll over 310 bn during 2012.

And given a spread of 4% compared to what it was - that means an extra 12Bn interest per year alone - and that's just for the debt that has to be rolled over in the next year.

For comparison purposes, raising VAT by 2.5% in the UK is expected to generate about 12Bn.

[Freamon]

Yesterday the consensus was that Italy would be screwed if yields reach 7%... which they have done today.

"With Italian yields now at 7.4% (at 11am), Italy will need a bailout if prices were to stay even roughly were they are."... until when?

But is there a critical date which will crystalise the problem, e.g. a rollover date on debt repayments or something like that?

Italy's sovereign debt has a fairly short maturity profile - they have to roll over 310 bn during 2012.

[russell]

It was a fricking joke about Domino's you dull sockie.

I haven't even looked at the bond rate.

Jesus.

[MarillionFan]

No its at 7.4, MF got mixed up.

It was a fricking joke about Domino's you dull sockie.

I haven't even looked at the bond rate.

Jesus.

[russell]

Crikey - Sounds like the balloon's really going up now.

You can't claim we're not living in interesting times.

No its at 7.4, MF got mixed up.

[OwlHoot]

Just hit 9%.

Dominos now offering 2 for 1 and a free bottle of coke!

Crikey - Sounds like the balloon's really going up now.

You can't claim we're not living in interesting times.

[russell]

It's not like the whole debt pile just became 7.4% FFS.

If Italy issue new 10 year bonds to borrow money they will have to pay a coupon rate of 7.4%.

[doodab]

But is there a critical date which will crystalise the problem, e.g. a rollover date on debt repayments or something like that?

I can't frankly be arsed searching the web for this, and I know what a HUGELY well-informed bunch inhabit this cyber-island of knowledge.

They periodically auction new bonds in order to borrow more money (partially to repay the last lot) and everytime that happens they need to pay the new interest rate.

[MarillionFan]

Yesterday the consensus was that Italy would be screwed if yields reach 7%... which they have done today.

"With Italian yields now at 7.4% (at 11am), Italy will need a bailout if prices were to stay even roughly were they are."... until when?

But is there a critical date which will crystalise the problem, e.g. a rollover date on debt repayments or something like that?

I can't frankly be arsed searching the web for this, and I know what a HUGELY well-informed bunch inhabit this cyber-island of knowledge.

It's not like the whole debt pile just became 7.4% FFS.

[MrMark]

...making it more likely that they can't maintain the payments on the money they do borrow, thereby forcing the yields even higher, making it even more likely they can't pay, and ultimately the holders of those bonds lose their money, or the public get sick of the whole bloody thing and revolt, and the holders of bonds lose their money. It all looks to me like a self fulfilling prophecy, and while I'm generally a supporter or free markets, I can understand why the middle classes in Europe and the US are starting to question the wisdom of it all.

WHS

[Tensai]

Yesterday the consensus was that Italy would be screwed if yields reach 7%... which they have done today.

"With Italian yields now at 7.4% (at 11am), Italy will need a bailout if prices were to stay even roughly were they are."... until when?

But is there a critical date which will crystalise the problem, e.g. a rollover date on debt repayments or something like that?

I can't frankly be arsed searching the web for this, and I know what a HUGELY well-informed bunch inhabit this cyber-island of knowledge.

[russell]

Just hit 9%.

Dominos now offering 2 for 1 and a free bottle of coke!

Its at 7.44200 I think the 9% is the increase today?

[russell]

Aww, Sas. I hoped you'd have let russell fumble some attempt at an answer first.

I think Sas explained it OK, I would have done better but his was adequate.

HTH