Nomura Securities European Rates Strategy: Quantifying the Eurozone’s 2012 Financing Requirements
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Nomura Securities European Rates Strategy by Artis Frankovics
Frankovics said, "Quantifying the eurozone’s 2012 financing requirements. One of our core assumptions is that, in the absence of a credible policy response to the eurozone crisis, financial institutions in Europe will struggle to absorb the expected increase in public sector debt issuance in 2012 (see Nonlinearity to the Core?). In this strategy note, we quantify these concerns by outlining the likely 2012 supply outlook. We estimate the overall issuance to be higher than last year at €889bn (€1,516bn including bills) for the sovereigns and €439bn for the major SSAs. The increase in supply will make the issuance environment more challenging since it comes during a period of banking sector deleveraging and heightened fears of the sovereigns’ debt sustainability. We continue to highlight a failed or weak bond auction in Q1 2012 as a potential trigger point for broader market weakness."
Frankovics said, "Quantifying the eurozone’s 2012 financing requirements. One of our core assumptions is that, in the absence of a credible policy response to the eurozone crisis, financial institutions in Europe will struggle to absorb the expected increase in public sector debt issuance in 2012 (see Nonlinearity to the Core?). In this strategy note, we quantify these concerns by outlining the likely 2012 supply outlook. We estimate the overall issuance to be higher than last year at €889bn (€1,516bn including bills) for the sovereigns and €439bn for the major SSAs. The increase in supply will make the issuance environment more challenging since it comes during a period of banking sector deleveraging and heightened fears of the sovereigns’ debt sustainability. We continue to highlight a failed or weak bond auction in Q1 2012 as a potential trigger point for broader market weakness."
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