The Eurozone's Periphiral Problems - Short to Medium Term Obstacles

There are some key events to watch out for regarding the fate of the so called 'PIGS' countries in the Eurozone over the short to medium term.

P - Portugul: Current 10-Year Government Bond Spread = 7.01%

Short Term: - 

• Nov 20 - State Deficit data for Jan-Oct 2010 published
• Nov 26 - Final vote in parliament on 2011 austerity budget
• Dec 1 - Debt auction of 12 months bills

Medium Term: -

• Jan 1 - Public sector pay cuts, state pensions freeze and value added tax increase come into force
• Jan 23 - Presidential election

I - Ireland:

Short Term: -

• Nov - Four-year budget plan to 2014 is expected to be annouced, Ireland cancelled bond auctions this month after also cancelling them in October
• Dec 7 - Budget for 2011 will be annouced

Medium Term: -

• Feb/Mar - The IMF Article IV consultatition is expected
• July - Ireland must return to the capital markets to raise funds
• Nov 11 2011 - A 390m Euro bond is set to be redeemed. Ireland has no debt due until the end of 2011

G - Greece: Current 10-Year Government Bond Spread = 11.62%

Short Term: - 

• Nov 15/16 - Eurostat will annouce revised figures for Greece's 2009 budget deficit, expected to be 15.4% of GDP
• Nov 16 - Debt auction of 26-week bills
• Nov 18 - 2011 budget
• Dec - Next 9bn Euro instalment of 110bn Euro EU-IMF loan expected to be taken

Medium Term: -

• Jan 2011 - Greece returns to the capital markets with an auction of short-term bonds under its regular monthly borrowing programme
• April 23 - First anniversary of Greece's decision to seek a rescue package from the EU and IMF

S - Spain: Current 10-Year Government Bond Spread = 4.58%

Short Term: - 

• Nov 18 - Debt auction of 10-year and 30-year bonds
• Nov 28 - Regional elections in Catalonia
• Dec 2 - Debt auction of three-year bonds
• Dec 16 - Debt auction of 10-year and 15-year bonds

Medium Term: -

• May 2011 - Municipal elections and regional polls held in 13 of the country's 17 autonomous communities

10-Year Government Bond Spread Benchmark  2.53% (Germany)

Note that the wider the bond spread over the German 10-year benchmark is the higher degree of risk of investing in that bond due to the increased likelihood of default (as a rule of thumb).

Bond Yield information Courtesy of Thomson Reuters at http://markets.ft.com/markets/bonds.asp
Source of Infomation: Financial Times, UK Edition, Wednesday November 10th 2010.