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Alberto's avatar

I guess the euro issuances are related to a roll over, and the net number is not as amazing as when reading the post.

Covid was 5 years ago and the easing of financial conditions to issue debt were a reason to see the increase in debt issuance. Most of that debt was issued with a 5 to 7 years maturity.

I hope you can check it with real numbers. Without that check, I would not say that European corporations are making surprising new records.

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Ronan McGovern's avatar

1) For readers like me, when you say:

"Crucially, individual member states' debt would lose the (empirically false, but so far regulatorily established) risk-free status, which only the senior ESBies tranche would receive.",

is it worth adding a sentence stating the implication that national bonds would no longer be given a 0% risk weighting on bank balance sheets (only the senior trance of the ESBies would). This is what would prevent governments from having their banks buy their own sovereign bonds - as is currently done, right?

2) Tranches always remind me of the MBSs in the financial crises, but I can see the rationale of the approach here.

3) Seems like the right solution, but - like with rent control - since all European sovereign debt spreads are compressed, I don't see - politically - how any government with a compressed spread would agree to this kind of a change.

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