First Greece, Now Spain, and then...the World

Mike Shedlock
Posted: Mar 22, 2012 12:01 AM

Spanish Sovereign debt yields jumped again today following Restructuring Concerns expressed by Willem Buiter.

Spanish bonds fell, pushing 10-year yields to the highest level in a month, after Citigroup Inc. chief economist Willem Buiter said the nation faced an increasing risk of a debt restructuring.

Ten-year Spanish securities slid for an eighth day, widening the extra yield over similar-maturity German bunds, as a decline in European stocks sapped demand for higher-yielding assets.

“Spanish spreads moved much wider after Buiter’s comments,” said Lyn Graham-Taylor, a fixed-income strategist at Rabobank International in London. “This highlights concern over further debt restructuring. Bunds recovered on the resulting safe-haven demand.”

The Spanish 10-year yield jumped 14 basis points, or 0.14 percentage point, to 5.37 percent at 2:55 p.m. London time after rising to 5.38 percent, the highest since Feb. 16.

Dutch Bonds

The extra yield investors demand to hold Dutch bonds instead of German bunds widened after an independent agency said the Netherland’s budget deficit may increase.

The Netherlands Bureau for Economic Policy Analysis said the shortfall would exceed the European Union’s target of 3 percent. The agency said the 2013 deficit would be 4.6 percent, revised from 4.5 percent.

Spanish 10-Year Bond Yield

Willem Buiter is a bit too politically correct. I suggest the odds of a Spanish Debt restructuring is greater than 90%.


Another MF Global, Only Smaller: WorldSpreads has 13 Million-Pound Shortfall in Client Money

Following an "unusual pattern of client trading" WorldSpreads Announces 13 Million-Pound Shortfall in Client Money

WorldSpreads Group Plc (WSPR), a U.K. brokerage and spread betting company, said it has a shortfall of 13 million pounds ($21 million) of client money as it appointed KPMG LLP as an administrator to manage the business.

WorldSpreads owes clients 29.7 million pounds and has about 16.6 million in cash, the London-based company said in a statement. The firm’s stock was suspended on March 16 after it discovered a hole in its accounts.

“Due to the accounting irregularities that have been discovered, it is likely that there will be a shortfall to clients,” KPMG said in a separate statement. “One of the immediate priorities of the special administrators will be to investigate and attempt to reconcile all client positions in order to establish the extent of the shortfall.”

WorldSpreads’s founder, chief executive officer and largest individual shareholder, Conor Foley, resigned March 14. Roger Hynes, a former managing director at CMC Markets Plc, replaced him as interim CEO. Niall O’Kelly resigned as chief financial officer in February as WorldSpreads said it would post a full- year loss after an “unusual pattern of client trading.”

Clients’ accounts were frozen on the afternoon of March 16, preventing them from withdrawing money or adding to their funds, according to Sorrelle Cooper, a spokeswoman for KPMG in London. Any open positions were also closed, she said.

WorldSpreads clients facing losses may have access to the Financial Services Compensation Scheme, which covers as much as 50,000 pounds per claimaint, the Financial Services Authority said in a separate statement.

The firm has about 15,000 client accounts and 66 employees, who will be initially retained “to support the orderly wind down of the business,” KPMG said. Redundancies are nonetheless probable, it said.

This begs the question: Do you know where your money is?

Mike "Mish" Shedlock