Bloomberg earlier today:
“The vehicle that’s supposed to borrow on behalf of countries that can’t borrow, can’t borrow,” said Gary Jenkins, head of fixed income at Evolution Securities Ltd. in London. “They should be able to tap the market under any market conditions and it should just be a matter of price.”
You almost couldn't make this up, but it is true - and true because the EFSF 10 year currently yields 3.30% - which is 130bps over Bunds.
That doesn't that sound like 'AAA' rated issuance. Not now. Not with unresolved leverage and structural issues.
This is important because - after Greece - Willem Butler estimates there is Euro 300bn <at most> left of the original EFSF loss absorption commitments/guarantees.
And Italy - with 10 years stubbornly above 6%, the last auction barely covered and concerns investors may avoid debt not issued under the new 'insurance' plan - needs to roll over Euro 300bn (of its Euro 1.6 trillion debt) in 2012.
The ECB has already bough Euro 70bn of Italian debt in its bond buying program.
Per my earlier post ('Endgame Scenarios') Mr. Draghi's patriotism is going to be fully tested.
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