Thursday, January 10, 2013
Spain Plans Record Bond Issues
Using what we know about bonds, what does this say about the economy of Spain? 'Bonds' like this, are in essence, buying the 'debt' of a country. If you were an investor, would this be an attractive purchase? Or like the audience that's already seen the magic trick once, will this second sell off instead be met with public mediocrity. In terms of macroeconomic policy, how could this affect the surrounding countries? Especially the wealthier ones?
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I think this excerpt from the article helps to answer your question of, 'would this be an attractive purchase?'
ReplyDeleteWith the reassuring ECB presence looming in the background, and Spanish and Italian yields still well above their German or French counterparts...
I think that with the Central Bank's help and the high yields on the bonds, investors will be very intrigued to spend their money on Spain's debt. Lots of risk though.
The economic forescast is so optimist and out of the reality. They also can create another speculation buble with can perjudice the current crisis. Also, I agree with some economist that say the fact that Spain decided to start the most challenging funding programme in the euro zone with a new bond carrying the shortest possible maturity raises questions about its own confidence in its chances of avoiding a bailout.
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