Don’t Worry about Rollover Risk

ECB’s Rescue Worsens Spain, Italy Maturity Crunch: Euro Credit – Bloomberg.

Don’t worry about the rollover risk. Spain will default on everything way before the rollover becomes an issue.

Spain’s finances are rapidly deteriorating, but the MSM takes the Spanish government at its word when it says that 72% of its planned bond issuance has already been sold. The key word there is “planned.” The Spanish just revised their deficit forecast to 4.5% of GDP from 3.5%. This means two things. First, they will need much more money to finance the deficit, so they are not 72% of the way there yet. Second, the real deficit numbers are probably much worse. My back of the envelope calculation is for a deficit of over 7% for 2012, which means Spain has only issued about half the debt it will need for the year.

Where is thatmoney coming from?


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