The landscape of the European government bond markets has remained in essence unchanged during the turbulence of the last nine months. All sovereign issuers have been able to rely upon their credit credentials to attract investors into financing their borrowing programmes. While sovereigns, supranational and agency issuers have found a willing and receptive audience, covered bond issuers have been spurned. As a result, the secondary market has all but disappeared for some issuers.
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IFR: What has happened over the last six or nine months in terms of the way sovereigns have approached the market and the differing levels which have been involved in relation to spreads to Bunds and to Libor? And are there any differences in the way you approach the market to achieve your funding objectives as a result of these changes?
Enrique Ezquerra Martin - Spanish Treasury Heads the Debt Division at the Spanish Treasury, since December 2005. Angelo Proni - EuroMTS He is currently Head of New and Domestic Markets for the MTS Group and is Chairman of the Board for MTS France and MTS Amsterdam, as well as a member of the Boards of MTS Germany, MTS Associated Markets (Belgium, Finland and Denmark) and MTS CeTO (Poland).Proni joined MTS in early 1999 and has covered a series of positions. Jeffrey Hogan - BGC Partners Managing Director, Business Development, BGC Partners in...
IFR: What are your views on European sovereigns issuing in US dollar format? Both Spain and Italy have recently done this with deals that have clearly been driven by the movement of the basis swap. This was the motivation for Italy issuing in dollar format on this occasion, if not all occasions. One question particularly stands out: do you think the basis swap shift is a permanent or a temporary phenomenon, and why did it move in the first instance?
IFR:Does this work in extraordinary circumstances? So, for example, at the height of the crisis when there were, and still are balance sheet constraints with banks unwilling to provide liquidity even to each other, should they be expected to market-make even sovereign, agency or covered bonds?