The auctions have experienced different fortunes

Emissions of borrowing of State programs have started strong this week. The auctions have experienced different fortunes. The Germany the attention Wednesday, Finanzagentur (the equivalent of the Agency France) failed to place the EUR 6 billion of debt in 10 years that was planned (see below). Also, the balance was less dark. Yesterday, the France raised EUR 6.3 billion, slightly below expectations, and the Spain 5,1 billion in announced range. The United States lifted the expected $ 30 billion on debt 3 years Wednesday. The United Kingdom was also active, with 2 billion pounds of a former strain more of 30 years, investors have welcomed. Surprisingly, us inflation-indexed bonds have been successful, despite the deflationary situation.

The first quarter looks particularly responsible. Throughout the year, the amounts issued should increase by 15 from 2008 in the euro area, about 800 billion euros, according to estimates of BNP Paribas. At the global, a tripling of the volumes is expected.

Concerns in Brussels

Yesterday, at a symposium on the recasting of capitalism organized in Paris (read page 7), the German Chancellor, Angela Merkel, has recognized that the crisis-affected countries accumulate "mountains of debt". It is, currently, "the only possibility" to fight against the crisis. Stimulus plans announced in the United States and Europe will considerably widen public finances. In the United States, Barack Obama himself has admitted that in 2009 the US budget deficit could reach 7 of GDP. Europe is not better off. The Maastricht criteria requiring a budget deficit of less than 3 of GDP and public debt below 60 of GDP only are not respected this year. On the publication of these autumn forecast, the European Commission has not hidden its concern on the subject, taking into account the stimulus measures studied by each Government.

Remains that each euro area Member State is not placed on an equal footing. The Italy with a public debt of 104.1 of GDP in 2007 according to the latest figures provided by the European Commission, the Greece (94.8) or the Belgium (83.9) are more fragile than the Germany (65.1) or the France (63.9). The swelling of their needs in terms of the loan, given this starting situation, can only lead to a differentiation of the rates that they will have to attract investors.

In this context, the market will monitor the award of the Greece short term debt next week. "This will be an opportunity to see if the dealers are present and verify if the coupons are so high," said Ciaran O'Hagan, in Société Générale.

Competitive products

A number of strategists believe that this "mountain of debt" will be absorbed by the market, provided that the transmitters there put the price. The risk of failure of a European State in the next few years is not considered credible by stakeholders.

On the other hand, they recognize that the debt of the States will find itself in competition with other titles, offering an interesting performance and a level of reasonable risk. Secured bank debt emissions represent one alternative, both in the United States and Europe. GE Capital also managed an impressive lift of 10 billion dollars this week in this framework. In France, the society's funding of the French economy (SFEF) successfully launched a third guarantee of EUR 5 billion public bond issue. In addition, some countries think about extending the principle of debt guaranteed to non-financial companies.