Debt Profiles of At Risk Eurozone Countries

Here‘s an interesting set of charts from Spiegel Online describing the debt problems of the countries who make up a certain animal-related acronymn. The graphs on the maturity profiles of the debts for each country provide a useful perspective on the stabilisation deal.

70 replies on “Debt Profiles of At Risk Eurozone Countries”

Looking at slide 8, I’m left with a single thought….”Thank Heaven for the NTMA”. Ireland is the only one where the debt rollover dates look sensible.

Mind you, whatever about the NTMA, slides 1 & 3 indicate that Ireland has other areas where policy and implementation of policy have led to less fortunate outcomes.

Those numbers on Slide 8 are plain wrong, to the point of misleading. There’s no bond due for redemption/rolling this year. There’s a 2025 bond of over €8bn that doesn’t appear. Other years are overstated, to greater or lesser degree.

Just because something’s on the internet doesn’t make it true… the actual data is on

@ Aiman

think the 2010 figure is basically the T-bill program which amounts to 7.95bn. Its a bit rough on some figures, but its broadly correct on Ireland anyway.

@Aiman, perhaps, but don’t forget all this rubbish that was issued recently that is not included in the link you provided.

While the debt is treasuries, rather then bonds, it will still need to be rolled over this year. Presumably that is why Bloomberg (from where the data for the above graphs was sourced) includes it in Ireland’s debt repayment schedule for 2010. Basically, because it has to be repaid this year. And it is a debt.

I imagine the 2025 bond was ommitted from the graph because the charts only look at the next ten years for all countries, so it would make sense to do the same for Ireland.

‘There’s a 2025 bond of over €8bn that doesn’t appear.’

That would be due the to time range of 2010-2020 chosen, rather than oversight. Just a hunch.

I’m confused – last week the EU spring forecast predicted our “2010 public budget balance as a proportion of GDP” at 11.7%. Here on the first slide which cites as the source “European Commission” we are shown as having a 14.7% deficit in 2010. The difference can’t be Anglo because Anglo’s €8.3bn would be too big and would bring us to 20%. It could be €2.7bn but what would be the logic of including one but excluding the other. Where is our commitment to Greece accounted?

Anyone care to reconcile the “European Commission”‘s Spring forecast of 11.7% and this new 14.7% ?

The Spring forecast is here

@all – the numbers were for “bonds”. And they’re for the most part inaccurate. If bills are being included, these total €7.95bn, not the €8.6bn in the graphic. (That last number from Bloomberg, where Spiegel say they sourced their data).

Accept that the numbers only run to 2020, tho’ would think that that gives a compressed and inaccurate view of each country’s funding profile.

On the bills – the old question of offsetting cash balances comes into play, though I suppose Eurostat treatment is immutable.


Interesting link.

The Irish budget deficit for 2010 has all the attributes of a rolling maul. No one seems to be able to figure out how to bring it down legally …

Good day for the Euro.

@David O’Donnell
I suppose we’re about to find out who has the deeper pockets, the speculators or the euro’s members. I strongly believe that it’s the euro’s members. The speculators then should now be cashing in their chips. They contributed greatly to 3 deaths in Greece but I doubt that will trouble them much. The only danger they’ll have faced is the champagne corks that will now be flying everywhere.

We all know that we are where we are but how did we get here? The excellent Kathleen Barrington of the SBP provides some astounding quotes from our (ever dearer) leader. Warning: anyone whose policy is anger should not read this e.g., “On April 24, 2007, Cowen addressed the Federation of International Banks in Ireland. ‘‘Our economy is stronger than at any time in our country’s history,” he said.”
Courtesy of poster He3 on another forum.

Remember Anglo was having trouble borrowing, it has been written, since the start of 2007 and with the credit crunch biting our other massively borrowed banks can not have been far behind. The construction sector and hence employment was crashing and house prices had begun their long collapse. But with an election in the offing the government decided to tell us that all was not just fundamentally sound, it was actually in peak condition: ‘‘Our economy is stronger than at any time in our country’s history,” he said.” Disgraceful.

@Oliver Vandt – Speculators? More like panicked holders, I’d have thought. The reaction (and phraseology) of various EU Finmins and their spokespeople is beginning to sound disturbingly Anglo-ish.

Barroso last night, then an unnamed German Finance bod today, have both come out in favour of a ban on short-selling in bonds (just like Ireland did in financial shares, and Greece also imposed a short-selling ban on shares last week). The problem is deficits and their funding, not speculators and short-sellers. No doubt there are a few aroundbut by no stretch of the imagination are they the cause of the current problems – nor will these problems be properly addressed if so misidentified by policymakers.

If short-selling of bonds (or shares) is to be banned shouldn’t, as a matter of greater size and importance, purchasing on margin be outlawed too, or even first? It’s far more prevalent, in my experience.

@eoin – hadn’t seen that $500m, thanks. That would add c.€385m, leaving the number still overstated by a rounded $200m. Peanuts in the current climate, though there are other overstatements in the Spiegel table, far as I can see, leaving the total overstated by about the new unit of conversation, €1bn.

@ Aiman

as i said above, the Der Spiegel graphs are somewhat rough, for whatever reason, but they are relatively ballpark in terms of figures, and are true to the trend and the story they appear to show – Ireland’s refinancing pressures would seem to be much easier over the next few years than most of the other PIIGS. That

I have to disagree. The analogy I would use is that the speculators bet on the production closing and then shouted fire in the crowded theatre. Just because they got the entire crowd to run doesn’t mean that the crowd are driving things. Greece was always going to be bailed out. Germany should have acted sooner but it was always going to act. The speculators have waged a media and financial campaign of terror to scare the crowd into thinking that it wouldn’t be. Now that they’ve made their money they will move on to Britain or Eastern Europe. If not stopped then in twenty years time they’ll do it to America too.

Insofar as “speculators” derailed Greece, I’d contend they did it by lending them money via the bond markets, for up to 30 years at a time, in the years leading up to 2007/08. These speculators, among them some large German, French and Belgian banks now propped up by the EU taxpayer, went long with borrowed money. Only, because they were BUYING with money they didn’t have, they were (and continue to be) called investors.

I appreciate your point re (I presume) CDS. The market in them is dangerously opaque, and the reportage of that market generally is among the worst I’ve seen in financial markets in decades. However, the market in Greek CDS is fairly small. In any event, were the ECB to have undertaken to write CDS contracts they felt were overvalued (in whatever Eurozone country) it would have scared outright speculators silly, at little cash cost – certainly compared to the current plan. Unfortunately, it would probably have had little effect – just like the ban on shorting Anglo did little for its survival as a standalone entity.

No proof has been adduced to back up the short-speculator claims. I’d love to see some. Until I do, I’ll stick to my view.

Correction – when I said “buying with money they didn’t have” I meant didn’t own.

If you mean that the weakness of the Piigs/Euro structure gave them their opportunity then I couldn’t disagree. But given that they make their money from volatility, getting a situation to spiral out of control is in their interest. An article from February:

“Smaller in size than big banks or institutional investors, thousands of hedge funds control almost $2tn (£1.27tn) in assets and they look for liquid markets in which to make a quick profit.

Unlike bigger investors such as pension funds, which take a long-term view, hedge funds want a profit at the end of the year, and volatile situations offer a great opportunity. It doesn’t matter whether a stock, a bond or a currency goes up or down, any big swing will allow them to bet one way or another, and money will flow as long as the bet is right.”

It would be really strange if speculators weren’t involved in an unstable situation and from the article they don’t seem to be denying that they were trying to get the Euro to fall by targeting Greece. They’ve succeeded.

“Concerns about the ability of Greece, Spain and Portugal to pay their debts had added to “negative sentiment” on the euro, a foreign exchange trader said. As much as $79bn of contracts betting on the future value of the European currency were traded globally on Friday, almost twice as much as the previous Monday, according to data from the CME Group.

Hedge funds and other speculators often borrow money to make a bet. Expecting that the value will fall, they will sell the currency, and buy it back once the market has fallen, paying back the amount borrowed, and pocketing the difference.”

Also from Feb 09:
“Economist Joe Stiglitz, who is advising the Greek government, last night denied that the country would require a bail-out, and urged national authorities to intervene in markets to “teach the speculators a lesson”. Likening the situation to the Asian financial crisis, in which even healthy economies were targeted as hedge funds and investors withdrew from the region, he told the Sky’s Jeff Randall Live show: “The speculators will always look for the weakest link. What they’re doing now is a version of the Hong Kong double play in 1997 /1998.

“What Hong Kong did in response was to raise interest rates and intervene in the stock market. They burnt the speculators and Europe needs to do the same thing.”

Looking at Ireland from the USA …and without an economics background, so I might be very wrong.

I am beginning to wonder has the Euro been a really bad thing for Ireland. In effect it contributed to the property bubble and the unrealistic economic euphoria of the the years 1998 to 2007. It eliminated the singular most important economic tool a country has – its own currency. Ireland’s external debts are probably denominated in Euro’s and maybe to a lesser extent in dollars, the latter Ireland has absolutely no control over and the former Ireland arguably has no control over. To my mind Ireland ultimately will need to make the difficult decision to exit the Euro and get as much of its debt as possible denominated in its own currency. I am skeptical that currency harmonization worked to Ireland’s benefit. Ireland has lost control of its economic destiny and will lose more control (including taxation) unless its politicians have the courage and confidence to act and assert Ireland’s economic sovereignty. I don’t think the budget deficit in Switzerland is nearly 15% and they do not have 14% unemployment, and I am sure their currency is doing just fine. Ireland intrinsically has greater natural resources than Switzerland and an equally talented population. Comments welcomed….

Devalue the euro.

It makes sense. It will enable all euro revenues to rise, if other currencies are not more successful in their devaluation attempts! But the inflation will be a burden. On the other hand, refusing to raise interest rates will help reduce interest in the euro and will not excessively deflate remaining asset bubbles.

You know it makes sense!

Teaching gamblers a lesson! Is this possible? I doubt it. They no longer need to put actual cash on the table for their bets; its all virtual stuff, except of course their winnings – which ARE withdrawn as cash! Any losses are passed, via legislators, to the tax-paying suckers!

Think carefully on the matter. Aggregate economic growth is not possible absent an input of virtual credit which netts out as an output of real debt. This debt load is in excess of the nett aggregate economic surplus (Primary Surplus is negative). Marginal product of Credit is now negative. Something has to give, and it will.

This is a global debt pedicament. It will, in time unravel – very badly for many.

B Peter

@NJ Celt -“I don’t think the budget deficit in Switzerland is nearly 15% and they do not have 14% unemployment, and I am sure their currency is doing just fine. Ireland intrinsically has greater natural resources than Switzerland and an equally talented population.” but Switzerland has not had a housing bubble and generally appears to manage fiscal issues in a very prudent way. At the moment Switzerland is trying very hard to stop its currency from appreciating.

From Simon Johnson & Peter Boone in today’s FT,

“Ireland is held up as a model to suggest that this is feasible – but despite their austerity, even the perpetually optimistic European Commission thinks the Irish budget deficit will be close to 11.7 per cent of GDP in 2010 and 12 per cent in 2011. Absent a miracle in global growth, it will soon knock on the door of the European Stabilisation Mechanism. Ireland is the canary in the fiscal adjustment coal mine; it looks sickly.”

What is the point of avoiding/ postponing default if it just makes us sicker?

@ Edgar “but Switzerland has not had a housing bubble ”

Membership of the Eurozone was a major reason for the Irish bubble (i.e. low interest rates, easy access to wholesale markets).

So much focus at the moment on public debt and deficits. Total foreign (net) indebtedness and current account deficits need to be considered.


defaulting when you are running a primary deficit of 8-9% of GDP would be pretty stupid. That would be a calamitous fiscal tightening. No public servants would be paid for the months of December & possibly November.

@Paddy Orwell – not being a member of the Euro did not stop the UK having a housing bubble, nor did it stop Sweden some time ago or the US. The cheap Euro credit argument deflects from the obvious policy failings.


Agree with you 100% on that. Banks leveraged up in the last decade in ireland, US, across all parts of Europe both inside and outside the Eurozone. The US, UK and Australia have all had housing bubbles along side Ireland. Euro membership is only a partial explantory factor for what happened here. You have to add lousy governance both public and corporate and inappropriate fiscal policy to the mix.

@Ciaran Daly:
“What is the point of avoiding/ postponing default if it just makes us sicker?”

To allow the well-connected and super-rich (often one and the same) to get out. But seriously, a default now would mean that Ireland will have to make an 11% cut in government spending right away. And that is likely to be very deflationary. Plus the good and the great in the whole world have decided against any default or restructuring.

@ Edgar: “The cheap Euro credit argument deflects from the obvious policy failings”.

Joining the eurozone was an obvious policy failing – perhaps the most obvious – although listening to the commentariat you wouldn’t have guessed it. Yes there was a bubble in the UK but not to the same extent. Furthermore, our membership of the euro reduced our risk of defaulting in the eyes of the money markets. This was not an issue for the UK.

@ Tull/Ciaran

i think it was Ciaran O’Hagan who said it here recently – the optimal time to default on your debt would be when the external debt is large and your deficit is zero. We are a long long long way from sustainably zero deficit.

By the way, as an fyi on the ECB buying bonds, the focus seem to be on shorter end Greece, Portugal and Ireland (in that order), and yields are getting squeezed in massively. Ireland is actually lower than Spain right now.

@Paddy Orwell – I repeat that blaming the Euro for our problems deflects from the obvious policy failings.

Other countries within the Euro managed OK. Once a decision to join was made (by the majority), the disciplines required were obvious. Euro membership is incompatible with loose financial regulation and loose fiscal policy.

Sure, we can have an interesting academic debate about whether we should have joined the Euro, but that is just an academic debate now and won’t help sort out the mess. Those who were against joining lost the argument when it mattered – get over it. The only important thing now is to deal with the policy failings and to regain international credibility.

Getting NAMA to conduct its business quickly woyld mean that debt would be reducing.

B Peter Woods is as usual, correct. There will be no growth for a long time and capital will be scarce indeed. Expect house lending to dry up even more? Radical, more radical than to date, measures will be needed. The sooner the better.

Australia uses a productivity commission, replete with economists and analysts, to examine aspects of the economy. McCuts and a razor gang. Certain luxuries are no longer affordable!

I agree with Edgar that blaming the Euro is silly. The Euro brought with it an elimination of currency risk premium and much lower interest rates. Lower interest rates are generally seen as a good thing by borrowers. Now if the borrowers act irresponsibly and borrow much more than they can replay, they can’t blame low rates fot that.

I find the graph of interest rates particularly interesting. It is completely obvious that they are cointegrated.

Does any know where you can get daily data? I’m interested in removing the cointegrating relations to get a ‘pure’ Irish bond price movement, and then see if movements coincide with particular events (such as publication of the McCarthy report, the budget, or imposition of pension levy).

@Rory O’Farrell – somewhere I came across a paper that used high frequency data (not Ireland), and they found that new infomration such as new forecasts took just 5 minutes to impact!

@ Edgar.
“Other countries within the Euro managed OK”.
Except of course the original PIGS. 10 out of 15? An overwhelming success no? Different strokes for different folks was what was needed. The anti-euro brigade may have been unable to beat the might of the establishment back in the 1990s but you can hardly say they have lost the argument given recent events. Alot of people on 30yr+ mortgages will be taking along time to ‘get over it’ . But hey, as long as the EU commission keep funding the establishment let them eat cake!

@ Garo.
lower interest rates = higher house prices. Independent CBs set the interest rate according to the needs of the economy. Ours was way below the optimum. As a result it skewed investment decisions away from more productive sectors. Add in population structure and immigration and hey presto there is your bubble. Of course there were other policies decisions as well aside from euro membership that caused the boom.

@Paddy Orwell – they lost the argument when it mattered – spilled milk! PIIGS – 5 out of 15 (not 10 out of 15) and at the very least Greece should not have been let join, also spilled milk. I can’t recall anyone being forced to buy a house, and indeed know some who rented as they thought that the bubble would burst.


“By the way, as an fyi on the ECB buying bonds, the focus seem to be on shorter end Greece, Portugal and Ireland (in that order), and yields are getting squeezed in massively. Ireland is actually lower than Spain right now.”

So we have survived last Friday!

Where is the next shock coming from? China?

@ Edgar.
No. The result was never in doubt. The ESRI said it was good for us and we naively believed them. After that it was a fait accompli. Winning the argument was essentially an academic exercise. People bought because the rent was so high. Others made mistakes. That is human and naive perhaps but forgiveable. Economists paid by the taxpayer who should know better telling us to join, is much harder to forgive.

@Paddy Orwell – we should probably take this one offline as it is off topic. There was a very healthy debate among economists about this and not all agreed with joining the Euro. The ESRI analysis (done before I joined so I had no input into this) looked at pros and cons. I repeat myself – other countries have shown that it was perfectly possible to be a member of the EU and not end up in the kind of mess we are in – the Euro was not a primary cause nor will it be the primary solution.

@ Paddy Orwell

Membership of the Eurozone was a major reason for the Irish bubble (i.e. low interest rates, easy access to wholesale markets).

It was foolish to allow countries like Ireland and Greece with poor governance systems and corruption cultures to join the EMU.

Do you seriously believe that countries in the Eurozone which survived intact were run by clones of the Irish poltroons who ruined their economy?

The political leadership, the central bank, the regulator etc were all victims of the ECB!!

The fact that Harney, Cowen, Martin, Dempsey etc are still in charge, speaks volumes for the failed system that is tolerated.

The dog eat my homework Sir!!

@Oliver Zandt – from your 2nd last post – ““Smaller in size than big banks or institutional investors, thousands of hedge funds control almost $2tn (£1.27tn) in assets and they look for LIQUID markets in which to make a quick profit.” (my emphasis).

Even the most fervent Hellenophile would never at the best of times have dubbed Greek bonds a liquid market. Nor Portuguese, nor Irish. I’ve no doubt of the existence of speculators, nor of their presence in these markets. What I do doubt is their size and significance in current events, certainly relative to the significance of fundamentals.

Like I said, I’d love to see numerical evidence that sheer big bad meanie speculators caused the blow-out in yields in peripherals. My own opinion is it had more to do with the laws of supply and demand, with naked speculation playing a small part.

@ Michael.
I don’t necessarily disagree. I merely said that euro membership was ‘a major reason’. there were of course others. One size fits all monetary policy for such a disparate group of States makes no economic sense regardless of the presence or othewise of other negative factors.

Its very very difficult to “speculate”, long or short, in the bond market – ie its incredibly boring going long and reasonably difficult to maintain a short. They’re a buy to hold investment in most cases. The change in prices is so small, and the size of spreads so big (relatively), in 99% of situations that you’d need to be going in and out all the time to make money, its not a directional play either side of the price. Thats basically why the CDS market was created, and even on that actual notional trades are not as big as most people would believe.

@Paddy Orwell – there were instruments available to policy makers that would have dealt with the fact that our cycle was not in sync with the core Euro area and that is why I maintain that the Euro was not the problem. Of course that would not have been politially easy but look where we are now. If the right instrument had been applied we would be in a very good position right now.

@ Edgar.
That is akin to taking the brake off the front wheel of your bike and trying to stop it with our foot instead – unnecessary and almost impossible to pull off.

@David O’Donnell – “Where is the next shock coming from? China?”

With food inflation running away there as reported today….. Your guess is as good as mine.

Not an economist but it seems it’s in nobodys interest to force us to default just yet. There’s plenty of money to be made from us especially with the backup of the rescue package. We are guaranteed some stability for the next 12-18 months. Question is – is this kind of moribund stability what we really want?

@Eureka – are you suggesting the ‘wolf pack’ is simply keeping us alive to play with us? Or like a vampire, keeping the prey alive to have a good old drink of blood every now and again until they die.

I thought this was a slow train wreck we are watching, not a horror movie.

@Oliver Zandt – afraid so.

I’d still like to see empirical evidence of bearish speculation in the peripherals having caused recent spread-widening. Measures of the size and cost taken by the EU should be only be directed against definitely-existing targets. (Tho’ I have the impression all the speculator talk is just political sugar-coating and misdirection).

@ Joseph
Not quite. Short selling seems to be very profitable and easy to do. The market seems pretty easy to manipulate.

@ Lorcan

Fascinating link.
It seems that the OECD reportings and comparisons between member countries provoked competition to improve rankings funded through borrowing??
Can we have our mmbership fees back?

@ all
I don’t understand all this negative attitude towards ‘the markets’ and the equivalent blame given to borrowers and lenders.
Central europeans who worked hard and saved are not to blame. Sure their pension fund managers bought what turned out to be dodgy bonds but at the time government bonds would have been seen as conservative prudent long term funding.
We should be grateful to them for investing in us, particularly now when we would be have to cut spending by about 40 percent if they stopped funding us.
Sure if a entity is truely insolvent then these prudent (or so they believed) lenders must lose out. But we made a deal with them when we agreed to borrow, and i see no reason why shouldn’t make every attempt to pay them back in full, until it is clear we are truly insolvent.

Is that an accurate characterization of main players in the market – hard working central Europeans?
What does Blankfein tell us about the nature of markets and those behind them?

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