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Greece CDS Blows Out, Approaches Record Wides Again; Portugal Sells 5 Year Debt At Massive Spread

Courtesy of Tyler Durden

Markit reporting that Greek Bund Spreads have suddenly exploded by 65 bps to 776, the highest since May 7, and inches away from the all time record of 900 bps, even as CDS blows out to over 900 bps.The reason quoted is that traders have cited forced index selling and the absence of central bank buying: have banks finally left Greece to dry? Or is it just that Greece is once again caught lying, pardon, having to issue a public retraction: apparently German Handelsblatt ran an interview with Greek finance minister George Papaconstantinou, in which the Greek was “misquoted.”According to Market News: “Some of the headlines issued earlier Wednesday on the basis of an interview Greek Finance Minister Giorgos  Papaconstantinou gave to German business daily Handelsblatt were based on an erroneous version of the interview placed by the paper on its website. Papaconstantinou did not say in the latest interview with Handelsblatt that Greece would get its deficit-to-GDP ratio below 3% by mid-2012; that and some other headlines were based on an older interview the paper accidentally published. In the actual interview, according to the print version of the newspaper, Papaconstantinou said, “Of course not,” when asked if he expects his fiscally troubled country to go bankrupt.” The credibility-deficient minister also noted: “The country will “absolutely” endure the crisis without
restructuring its debt, he vowed, since such a step “would exclude Greece for a long time from the financial markets.” The punchline was the conclusion that Spain and Portugal are “in a much better position” than Greece. Which bring us to our next point – Portugal’s 5 year auction which came in at 4.657%, almost a full percentage point worse compared to the last auction on May 26, which closed at an average yield of 3.70%. Portugal may be better, but at this rate of collapse it means absolutely nothing.

More on the Portuguese auction from Market News:

Portugal’s debt agency, or Instituto de Gestao de Credito Publico (IGCP), allotted E943 million of the 5-year benchmark 3.35% Oct 2015 OT Wednesday, at a bid-to-cover ratio of 1.8 times.

The size allotted came in above the indicative range of E300  million to E800 million and was sold at an average yield 4.657%. 

The debt agency said it received total bids of E1.687 billion, with  E943 million allotted, resulting in a bid-to-cover ratio of 1.789 times (unrounded).

This compares to the previous 5-year auction on May 26 for E1.0 billion, which was then sold at an average yield 3.70% and covered 1.83 times.

As Greece prepares for bailout #2, gold is once again merrily chugging along.


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