Spanish debt

Foreigners Dump Nearly €80 Billion in Spanish Debt; Haircuts Come After More Dumping

Mish's Global Economic Analysis,

29 July 2012

Through the first half of the year, foreigners reduced Spanish debt by Nearly €80 Billion as banks in Spain gobbled up more of the toxic garbage.

 Foreign investment in Spanish public debt has decreased by €78.168 billion in the first six months of the year, standing at  €203.271 billion euros, compared to  €281.439 billion which reached the end of 2011. This is a break of 27.7% over last year.

The largest decreases were recorded in February and March, at nearly €25 billion each month.

Analysts note that Spanish financial institutions that are supporting strongly the Treasury issues and thus raising their level of debt thanks to interventions by the ECB

.

Contrary to popular belief, the LTRO and other ECB financing programs that allowed Spain to accumulate more Spanish bonds is not a favor to Spain but rather a favor to foreigners who are now unloading the debt.

Just as happened with Greece, as soon as foreigners dump enough Spanish debt, haircuts on the bonds will come.