ECB largest holder of Irish Government Bonds

Dreaded_Estate

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FT Alphaville Irish government debt needs you

Interesting piece in FTAlphaville suggesting that the ECB now holds about €18bn of Irish government bonds out of a total of just over €100bn.
About 17% of the total outstanding!



To have an idea of who owns this external debt, we utilise a number of sources. First, we take into account the ECB Securities Markets Programme buying (SMP): in total, about €61bn of Greek, Irish and Portuguese securities have been bought by the ECB. We believe the majority was Greek debt, with the rest slightly skewed in favour of Irish debt (say 15bn to 20bn). Overall, we assume 30% of the ECB SMP buying has been in Irish debt (€18bn – the SMP likely makes the ECB the biggest single debt holder of Ireland, Portugal and Greece).
 


Thac0man

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Very interesting indeed. You could have titled this thread "What have the Europeans ever done for us, eh?". ;)
 

Dreaded_Estate

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Importantly… Ireland built up a lot of cash deposits in 2008, which it could run down more than €10bn if market access remains limited/too expensive. With monthly cash deficits of about €1.5bn, limited bills redemptions (€2.75bn in Q1 11) and no bond redemption until November 2011 (€4.4bn), Ireland is not under severe pressure to issue large amounts for meeting cash needs. As such, the NTMA confirmed on 9 September that Ireland was fully funded until next June, which is our assessment as well, if Ireland decided to run down its cash balances entirely (although we suspect it will want to keep some cash buffer to hand).
I think the figure for redemptions in Q1 11 is €5.4bn not €2.75bn
 

slumdog1971

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FT Alphaville Irish government debt needs you

Interesting piece in FTAlphaville suggesting that the ECB now holds about €18bn of Irish government bonds out of a total of just over €100bn.
About 17% of the total outstanding!

What is the problem with a central bank buying Soverign bonds?

Shouldn't the ECB support states?

In my opinion, humble as it is, the ECB should be paying for Anglo Irish. After all the problem isn't Anglo, it's the banks who loaned the money to Anglo.
 

Dreaded_Estate

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What is the problem with a central bank buying Soverign bonds?

Shouldn't the ECB support states?

In my opinion, humble as it is, the ECB should be paying for Anglo Irish. After all the problem isn't Anglo, it's the banks who loaned the money to Anglo.
No problem just surprising that they were one of the largest holders of Irish debt in June 2010. Probably gone even higher since then.
 

grafter1

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What is the problem with a central bank buying Soverign bonds?

Shouldn't the ECB support states?

In my opinion, humble as it is, the ECB should be paying for Anglo Irish. After all the problem isn't Anglo, it's the banks who loaned the money to Anglo.
FFS - is anyone in Ireland responsible for our mess at all? Incredible.

Anyway for those of us who thought the Irish debt crisis went out of control in August 2010 here is concrete proof that the only demand for Irish bonds in Q2 2010 came from the ECB. They bought €18.3Bn worth. God only knows how much they hold now.

How long more can this charade continue? Is it any wonder that Europe want bigger cuts in the forthcoming budget
 

grafter1

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So RBS and other euro banks began dumping heavily in Q2 as the Irish central banks and irish financials increase their holdings.......

All non Irish holders began a serious dumping of Irish paper
 

Squire Allworthy

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So RBS and other euro banks began dumping heavily in Q2 as the Irish central banks and irish financials increase their holdings.......

All non Irish holders began a serious dumping of Irish paper

Would appear that way.

Would love to know the make up of other non Irish investors.
 

ivnryn

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What is the problem with a central bank buying Soverign bonds?

Shouldn't the ECB support states?
The point is that if the ECB was required to buy sovereign debt, then it would reduce the incentive for any one country to keep its deficit in check.

If a country risks default, it would still be able to borrow at a low rate and so would keep borrowing (if Greece had to pay 10-20% on its bonds, it would stop borrowing). It would effectively lead to an incentive for each country to behave irresponsibly.

Also, given that the treaties don't actually require countries not to default, a country could just borrow lots from the ECB and then default, over and over (well until it was kicked out and/or the Euro collapses).

More pragmatically, by shifting the bonds to the ECB, the original bond holders have effectively been protected. The effect is that they were paid a risk premium for holding Irish government bonds and then when the crisis actually happened, the ECB protected them.

The bond holders should have had to take the hit since that is why they got higher interest rates on their bonds.

It would also be interesting to see how many bonds are held by the ECB as collateral for loans to the Irish banks. I assume that this thread is about directly held bonds?
 

MPB

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No problem just surprising that they were one of the largest holders of Irish debt in June 2010. Probably gone even higher since then.
It would have been cheaper for us and better for the ECB if they had just acknowledged the fact that the profligate lending of German and French Banks, allowed by the EUs decision to relax regulatory rules in 2002 at a conference in Lisbon and that also allowed profligate borrowings by peripherals Banks, was their responsibility.

Now all we have is zombie Banks and a massive sovereign debt burden, that will turn us into a zombie economy.
 
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cozzy121

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Vote Yes to Lisbon!!

... and bow before your new masters, serfs....
 

Cassandra Syndrome

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What is the problem with a central bank buying Soverign bonds?

Shouldn't the ECB support states?

In my opinion, humble as it is, the ECB should be paying for Anglo Irish. After all the problem isn't Anglo, it's the banks who loaned the money to Anglo.
Sure why stop there? Lets have the central banks support us all. We can live it up like hogs and they can just keep printing money. Who needs the hassle of production functions when we have now got printing presses...
 

Cassandra Syndrome

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FT Alphaville Irish government debt needs you

Interesting piece in FTAlphaville suggesting that the ECB now holds about €18bn of Irish government bonds out of a total of just over €100bn.
About 17% of the total outstanding!

Excellent table thanks Dreaded. The Central Bank since June has condensed its monthly report. It has omitted the total monetary balance sheet in the last 2 reports. In June that 20 Billion of cash the government has in deposit was being squeezed by the near 20 billion they have on credit with the banks. I say its surpassed now. So the government is probably over 110 Billion in net debt now.
 

nuj

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FT Alphaville Irish government debt needs you

Interesting piece in FTAlphaville suggesting that the ECB now holds about €18bn of Irish government bonds out of a total of just over €100bn.
About 17% of the total outstanding!

That €18bn number is rubbish, and was sourced from a research item by Barcap (Barclays investment banking arm), over which they no longer stand.

The initial intervention was €60bn, to the end of June, and was targeted mainly at Italy, Greece, Spain, Portugal and Ireland. If you look at the relative sizes of the markets, Italy is 10 times the size of Portugal and Ireland (both of which are roughly the same size), Spain is 4 1/2 times their size, and Greece twice their size.

The analyst made the assumption only Greece, Portugal and Ireland were targeted, and that they were were bought on a pro rata basis. Sloppy, lazy, and inaccurate on his part.

(None of this post should be taken to construe denial of our current predicament, but I loathe sloppy research and journalism).
 


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