The buyers have seen their investment rise 42% in only 2 months, that’s an annualized return of 720%!! When Jose & Maria put their savings on the bank, they get an annualized return of 1%. Dam, it feels good to work in Finance, thanks Draghi, we love you. Please keep printing more money, never mind exacerbating inequality. After all, everyone should know about these opportunities. If the fools Jose & Maria prefered investing in “safe” Espirito Santo commercial paper .. it’s their problem.
One question urges: Why would the Portuguese Government issue EUR 5.5 billion on Jan 13th (2 billion for 30 year notes + 3.5 billion for 10 year notes), knowing a QE program would be announced 1 week later (which would obviously drive down yields and make it much cheaper to borrow)? Why did they pay a 4.1% coupon when only 2 months later they are trading at 2.15%? That equates to roughly EUR 1.3 billion left on the table in 2 months, more taxpayer’s money completely wasted to the benefit of the elites. Why is no one asking questions to Maria Luisa Albuquerque? Why didn’t they invite Jose & Maria to the party by allowing small retail Portuguese investors to participate? And please don’t tell us that it was hard back then to predict the rates would go down… The SNB broke the peg with the EUR 2 days after we issued those bonds because they knew what was coming. The fact the bonds attracted a 2.5 bid-to-cover ratio also illustrates how mispriced the bonds were issued at (14 billion demand from investors for 5.5 billion supply). Anyone involved in the financial markets should know what was coming, specially insiders like our Treasury / Government. If they didn’t, then maybe step aside and make space for competent people (obviously people not affiliated with PS / PSD).
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