GREEK DEAL WAS PERFECTLY TIMED BY EUSSR: ITALY'S AND SPAIN'S BORROWING RATES DROPPED

THE EU'S KABUKI THEATER HAS PAID OFF - DESPITE ANOTHER ROUND OF DOWNGRADES AND NO LONG-TERM FIX:

 Italian and Spanish borrowing costs plunged to the lowest in at least 11 months at debt sales today as investors ignored downgrades by Moody’s Investors Service. 

Italy sold 6 billion euros ($7.9 billion) of bonds, meeting its target as its three-year borrowing costs fell to 3.41 percent, the lowest since March. Spain sold 12-month bills at an average rate of 1.899 percent, the least since October 2010, according to data compiled by Bloomberg. Belgium, Greece and the Netherlands also sold debt, as total euro region issuance today amounted to 20 billion euros. 

“The idea of Moody’s downgrading the country was really not a factor that went against it because it probably was already priced in,” Annalisa Piazza, a fixed-income analyst at Newedge Group in London, said in an e-mail about the Italian sale.

Italy and Spain were both cut to A3 by Moody’s, which cited uncertainty over the euro region’s ability to deal with the sovereign debt crisis even as it said new governments in both countries were taking steps to overhaul their finances. Demand for government debt is being underpinned by three-year loans made in December by the European Central Bank, which will offer a second round of the financing, known as LTRO, at the end of this month.

TOMORROW THERE MIGHT BE ANOTHER BUMP IN THE ROAD - AND THERE WILL CERTAINLY BE ANOTHER ONE BEFORE THE WEEKEND; THERE ALWAYS IS.


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