Events to look out for in March 2011: Debt Auctions

Debt auctions always matter, but they matter even more in the present context of solvency and liquidity crises, where the markets fear that sovereigns have digged themselves so deep into debt that they won’t be able to fulfill their obligations. As I mentioned before, Portugal should auction bonds sometime between the 2nd and the 9th of March (although the 16th cannot be excluded either). By the looks of the progression of the previous ones and by the state of the bond market it won’t go well. Either way, the treasury has taken the offensive and has planned the repurchase of up to €4,342Bn and €4,934Bn for the 2nd of March. This should be interesting because there is a scheduled motion of confidence on the government for the 10th, which if it passes would bring it down. But, if things remain as they are it shouldn’t pass. Moreover, the president is too passive, the opposition doesn’t think the government is damaged enough and the Socialist majority is too hungry for power to either leave or ask for EU assistance. In the mean time, things get worse for Mr and Mrs Silva (Portuguese equivalent to “Smith”).

The other “dangerous” countries will obviously also auction debt, so keep an eye out for Spain, who will also have bond auctions, on the 2nd and on the 16th of March and  Italy on the 11th. Belgium, in the mean time is auctioning some 2.2-3.2 Billion in OLOs today, at between 4-5.5% interest.

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