Tags: Fears | EU | Borrows | More

Fears Rise as EU Borrows Even More

Tuesday, 07 Sep 2010 08:15 AM

Europe’s debt problems are exacerbating as governments ready themselves to boost borrowing in the capital markets to keep their economies afloat.

Some strategists fear that Europe’s weaker economies may not be able to raise the cash they need, and even core countries such as France and Germany could struggle.

“Spain, Portugal and Ireland are the obvious ones to worry about,” Padhraic Garvey, head of rates strategy for developed markets at ING Financial Markets, told the Financial Times.

“Are investors willing to stay long, or buy the debt of these countries? I’m still not seeing investors willing to buy into the periphery.”

Eurozone governments are aiming to raise $103 billion this month as compared to August’s $55 billion, according to ING Financial Markets.

However, other strategists believe governments will have little difficulty in funding themselves, even if they have to pay higher premiums or yields to attract investors noting that countries such as Portugal and Ireland have already raised most of the money they need this year.

Europe's recent "stress tests" of the strength of 91 of its major banks understated some lenders' holdings of potentially risky government debt, an analysis by The Wall Street Journal shows.

The reported figures presumably showed banks' total holdings of such debt as of March 31.

However, a closer examination of disclosures indicates that some banks failed to provide as comprehensive a picture of the institutions' holdings as European regulators claimed because they excluded certain sovereign bonds from their tallies, and reduced the sums to account for "short" positions they were holding, which neither regulators nor most banks disclosed when the test results were published.

Representatives of several banks have said they were simply following the guidance provided by the Committee of European Banking Supervisors, which coordinated the tests, and was itself facing pressure from national regulators and politicians design tests that would show the continent's banking system as healthy.

Meanwhile, European Union countries have approved a financial oversight structure meant to shield against market turmoil and contain the excessive risk-taking that many blame for the global financial crisis.

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Europe s debt problems are exacerbating as governments ready themselves to boost borrowing in the capital markets to keep their economies afloat. Some strategists fear that Europe s weaker economies may not be able to raise the cash they need, and even core countries such...
Fears,EU,Borrows,More
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2010-15-07
Tuesday, 07 Sep 2010 08:15 AM
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