Seeking Alpha (October 6)
“French 10-year government bonds have fallen behind all major developed-market sovereign debt this year, posting the worst year-to-date total return among peers at negative 6.8%…. Plagued with massive deficits and total public debt near 120% of GDP, France’s performance trails behind both core European benchmark issuers and historically higher-yielding southern European debt.”
Tags: 10-year, 120, Benchmark issuers, Developed market, European debt, France, GDP, Government bonds, Massive deficits, Plagued, Sovereign debt, Total public debt, Total return
Wall Street Journal (October 2)
“The monthslong rout in global government bonds is getting messier and weirder.” For developed nations, sovereign debt had “moved broadly in tandem.” But on Thursday, “a flight to bonds considered safe drove U.S. Treasury yields lower, while those of French, Italian and Greek bonds jumped in a sudden divergence.” While this was a “reprieve of sorts for the U.S…. it was also a reminder of how extended selloffs in bonds can cause unexpected problems.” There is “a faint smell of a crisis in the making.”
Tags: Bonds, Developed nations, Divergence, Flight, France, Global, Greece, Italy, Messier, Reprieve, Rout, Selloffs, Sovereign debt, Treasury yields, U.S., Unexpected problems, Weirder
Bloomberg (December 8)
“Foreign investors are storming into Japan’s once-placid government bond market, exposing the world’s second-largest pool of sovereign debt to bouts of volatility sparked by traders thousands of miles away.” Overseas investors are “on course to scoop up more Japanese government bonds this year than in any period since records began in 2005” and currently “account for roughly 65% of monthly cash JGB transactions, up from 12% in 2009.” Welcomed by some, this “increased foreign involvement also raises the risk of a rapid or unruly retreat.”
Tags: 2005, 65%, Bond market, Foreign investors, Japan, JGB transactions, Overseas, Retreat, Risk, Sovereign debt, Traders, Volatility
Euromoney (November Issue)
With returns on some Ukraine sovereign debt exceeding 16%, there are obviously concerns over a possible default. “Ukraine’s policymakers, however, are adamant that default or even restructuring is out of the question. The main reasons given are national pride and, more cogently, a desire to maintain access to international capital markets.”
Tags: Capital markets, Default, Policymakers, Pride, Restructuring, Returns, Sovereign debt, Ukraine
The Economist (October 26)
“The euro mess has morphed from an acute crisis into a chronic one.” In contrast with the progress made on sovereign debt, however, “the euro zone has made less headway than other places in reducing this private-debt burden…. If the euro zone’s recovery is to strengthen, this burden of private debt must be lightened. According to the IMF, private debt is a bigger drag on Europe’s growth than government debt.”
Tags: Burden, Crisis, Euro zone, Europe, Government, Growth, IMF, Private-debt, Progress, Recovery, Sovereign debt
Financial Times (September 25)
“Congress needs to regain its senses before disaster hits.” Without Congressional action, the government will shut down next week and in several more begin defaulting on its sovereign debt. “As the sole superpower and provider of the international reserve currency, the US owes a duty to the world, as well as to itself, to uphold one of the most basic functions of a nation state. Flirting with a government shutdown is pantomime enough. Toying with whether the US will honour its sovereign debt obligations is pure recklessness.”
Tags: Congress, Defaulting, Duty, Recklessness, Reserve currency, Shutdown, Sovereign debt, Superpower, U.S.
Euromoney (April Issue)
“Asian sovereigns are overtaking advanced western economies in their financial and economic stability.” With the input of 400 economists and specialists, Euromoney conducted its latest country risk survey. The results reveal a “profound shift in global perceptions.” Six Asian countries (Indonesia, Singapore, Hong Kong, Malaysia, Taiwan and Macau) have advanced more than 10 places in the rankings and Singapore is now considered the world’s second-safest sovereign. In contrast, the highest ranking Eurozone country is Finland in fifth place. Hong Kong was rated the tenth safest, trumping Germany which stands at thirteenth.
Financial Times (October 5)
In a better-late-than-never move, the EU is moving to ensure banks are adequately capitalized. The EU still needs to get to the heart of the matter, “given that the biggest systemic risk to the region’s banks is contagion from sovereign debt.” Eurozone policymaking continues to deny “how serious the problems are until there is no alternative…. By then the cost of action is greater than it might have been with a more timely response.”
Tags: Banks, EU, Risk, Slow response, Sovereign debt
Washington Post (September 27)
“If Europe goes bankrupt, taking the rest of the world down with it, it won’t be for a lack of ideas about how to fix the continent’s sovereign-debt mess.” Yet, Germany has applied the brake to any number of fixes. It looks like the price for this inaction will be “a brutal, global recession.” Hopefully, Europe’s leaders can still avert this by demonstrating “clearly and convincingly that they have a plan for restructuring insolvent countries (e.g., Greece) while shoring up salvageable ones (e.g., Italy and Spain).”
Institutional Investor (September 15)
“The rise in government debt and consequent decline in sovereign creditworthiness…stand out as the biggest and most pernicious legacies of the financial crisis.” Political uncertainty ranks nearly as high. “European leaders careen from one crisis summit to the next” and U.S. politicians pursued a “similarly shaky direction” over the debt ceiling. “As a result, market participants are losing confidence that politicians can strike the right balance and contain debt without killing growth.”
Tags: EU, Politicians, Sovereign debt, U.S., Uncertainty
