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.
"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.
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.
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.
The Blanchard-Ubide proposal reminds me of my proposal from last year to issue consumption-linked perpetuities:
https://gideonmagnus.medium.com/the-case-for-consumption-linked-perpetuities-in-the-eurozone-557779ece710
But I doubt they got the idea from me...