Deke Xia Bank Assistance Twists And Turns In The French Aaa Rating Adds Renewed Fears

Network News Remittance November 23 - According to a Belgian newspaper

, led by France and Belgium, the Belgian Deke Xia Bank to bail out the changes in the program. Belgium can not be achieved after the requirements of the funding agreement Deke Xia Bank, the current negotiations with the French, the French were able to rescue Deke Xia Bank accounts for greater participation. The report sparked France's ability to maintain its AAA rating concerns, the original debt to France, if we increase the scale of support, fear of the French financial situation worse.

Affected by this Wednesday (November 23) sub-city rapid intraday euro fell against the dollar from 1.3530 intra-day high speed dropped to 1.3451 against the yen fell to 103.59 from 104.12 fast. In addition, China and the bad news from Italy after another, adding to market risks, such as the euro currency sales.

At last report, issued by the Italian banking industry rate of return on junk bonds rose to the level of bank or continue to face financial difficulties. Subsequent report showed that China buys in November HSBC manufacturing managers' index (PMI) preview is 48.0, the previous value of 51.0, the highest 32-month low, with yesterday, the U.S. and economic data for the euro area generally weak global economy caused a slowdown concerns.

Affected by this, the AUD / USD fell to 0.9755 low six weeks, USD / CAD rose to October 6, a maximum of 1.0423 new Sterling / dollar fell to new low of 1.5599 October 12.

October 4, banks Deke Xia joint venture in France and Belgium, the Bank Group announced on October 4 due to "structural problems", the reappearance of difficulties, which, Deke Xia as the debt crisis in Europe in the fall of the first bank. Affected by the rapid heating of Europe worried about the debt crisis, the euro / dollar fell to 1.3144 days low of 9 months.

October 9, France and Belgium, the government reached an agreement by the European debt crisis divided the issues Deke Xia Bank. Belgian Government will invest 4 million euros (about $ 5.4 billion) acquisition of Deke Xia Bank in Belgium, all assets, as well as Belgium, France and Luxembourg government Deke Xia Bank for a total of 90 million euros of financial security, exchange rates were: Belgium 60.5%, France 36.5%, Luxembourg 3%.

Deke Xia Bank and many large European banks, large holdings in the euro area, notably Greece, Portugal and Italy bonds. Data Deke Xia exposure current debt of 20 million euros (266 million U.S. dollars). Experts estimate that, Deke Xia much needed short-term liquidity in size from about 96 million euros ($ 127.7 billion), although lower than the 2008 financial crisis, 250 million euros (332 500 million U.S. dollars), but Deke Xia Bank has been in the interbank market for financing.

French Fear can not keep an AAA rating

Moody's rating agency warned on November 21, the last of the French government borrowing costs to rise and slow economic growth in the country, so that its current AAA rating of sovereign debt may be affected.

Prior to that, but there is an inspection report in the euro zone's second largest economy in the region, France is a clear warning is 3A rated worse in those countries. One of the main authors of the report of the German Bank chief economist Schmieding Fort Belem to sound the alarm to the French.

The market has determined that the assets of high credit French country is no longer secure, two-year sovereign debt crisis could be entering high-risk stage, while France will inevitably become the next crisis debt in Europe, the main battlefield.

Although the French government announced on November 7, a new budget in 2012 and 2013, respectively, the saving of "' 7000 million euros and 116 million, but the fear of European debt situation out of control, French, German 10 year bond yield spreads rapidly reached 189 basis points increase from June to 5 times, from the birth of the euro hit a new record.

In fact, the French "AAA" rating at risk and threatened. November 10, Standard & Poor from the post "own" the "French credit rating has changed" message automatically distributed to global credit users portal. Although fixed quickly, but this is no longer self-evident, the next cut is France.

France currently has a large number of Italy, Greece, Spain, Portugal and Ireland, the situation of the obligations of the country's debt, the debt of these countries face the recent default risk, that the French debt situation deteriorated quickly, leading French property yields continued to rise.

According to Bloomberg, as of September 17 in Italy, the total size of the principal debt of 1.58 billion euros, the total size of principal and interest outstanding of 2.18 billion euros. Including France, Germany, Italy has the risk of exposure to the banking sector reached 410.2 billion and $ 164.9 billion, the market worried about the risk to the banking system is difficult to stop the invasion.

According to statistics, the French banking sector has a large amount of debt in Italy, France, BNP holds "' 12.2 billion, the French bank Credit Agricole has "' 8.7 billion, currently French bank "' 1.5 billion. In addition, the French banking sector is also $ 55.7 billion of debt held by Greece, Spain has the risk of exposure to 146.1 billion and $ 177.9 billion, Portugal $ 28.3 billion, has $ 30.1 billion of exposure in Ireland.

Even more than most of France is shameful is that the creditors, the debtor countries themselves, and the market is clearly aware of the rescue mechanism of the debtor countries in Europe to save the debtors. French debt reached 1.75 billion euros, accounting for 87% of GDP after the United States, Japan and Italy, while the external debt accounted for 53.6% of GDP, almost double that of Italy, which 40-48% in non-Europeans have in other countries vulnerable to financial markets.

According to the IMF, Japan, USA and France, 2011-2012 GDP in the government's financing needs and the average of 54%, 27% and 20%. At the same time, U.S. and European banks have focused on the maturity of the debt on a large scale financing needs at the top. The world next year will be about $ 7 trillion banking sector debt maturity. Bond financing has become saturated in the case of banking and sovereign debt is formed between the fierce competition in the financing, some banks unable to bear.

Although the French claim to swear to defend the "AAA" rating, but I'm afraid odds.Within Europe, France is concerned about the debt continues to deteriorate, wants the ECB to take bold steps to play the role of lender of last resort But Germany is strongly opposed, France, Germany, that by the conflict.

France, the consequences of losing AAA shudder, as the second largest European economy and European Financial Stability Fund of the most important participant, loss of credit rating, not only will lead to EFSF funding costs have increased significantly, Above all, the French always 158 million euros in guarantees, according to the current structure, the European Financial Stability Fund lost more than one third of the credit-worthiness, and may even lead to bankruptcy flow relief mechanism of EFSF, which is already deep in the mire of debt crisis, the euro area, the same disaster.

by: wang may

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