The Spanish treasury publishes a monthly report on who owns Spanish sovereign debt. The headline figure, published with a four or five week delay, refers to 'registered' holdings -, that is, investment holdings plus whatever repo collateral happens to be on the owners' books at the moment. Lost in the noise principally because it is released another month later (it's compiled via survey) is the column entitled 'term' It is no coincidence that the yellow bars on the chart, result of subtracting the latter from the former, tell the tale that was unanimously described as 'capital flight' over the course of the first half of 2012.
Viewed from a distance sufficient to not provoke mass outbreaks of armageddonism, two observations stand out - one, exactly how enthusiastically foreign banks threw themselves into the task of becoming repo providers for their besotted Spanish brethren prior to 2012 and two, exactly how pissed off these same probably were when the ECB upset that apple cart with the introduction of vLTRO in December 2011. What looked to be 68 billion euros vaporizing across the border from December through April turns out to be all of 16 - and that in fact bought into rising prices by those same Spanish banks with their eurocash.
Do we need to point out that foreign-held debt declined only marginally during that manic rise in yields from May through July?
As always, there's more to the story. The Bank of Spain's quarterly review of foreign investment within the Kingdom makes it clear that, between bonds and money market instruments, non-resident holdings fell by 140 billion euros from December through June. We're not going to ask you to ignore that immense 20 percent drop but, before readers set out to do their homework, they should be aware of a few salient facts.
1). The figures include marketable debt for all sectors - financial, government and corporate
2). The amounts, as was noted in the previous post, are 'at market value'. As a reference, the Spanish government 10-year lost around 12 percent over the period
3). A large portion of the spoils of the two vLTRO operations were earmarked, and used, to retire maturing Spanish bank debt.
4). The environment had (and has) been one of diminishing corporate indebtedness, in any case.Not that we think that we're going to dissuade the many that believed that all these events were simple repeats of the 1930's. But really, was there ever very much meat on that bone?
Maybe we'll finish off this retrospective, and move on to more current topics, with a look at last year's disappearing bank deposits.