In Watershed Event, Europe Unveils Plan To Securitize Sovereign Debt
zerohedge.com / by Tyler Durden / May 30, 2017 3:13 PM
Less than a decade after various complex, synthetic, squared, cubed and so on securitized debt structures nearly brought down the financial system, here come “Sovereign Bond-Backed Securities.”
Moments ago, the FT reported that in a watershed event for the European – and global – bond markets, Brussels is pressing for sovereign debt from across the eurozone to be “bundled into a new financial instrument and sold to investors as part of a proposal to strengthen the single currency area.”
Call it securitized sovereign debt.
In the latest attempt by Europe to create a common bond market, a European Commission paper on the future of the euro seen by the Financial Times, advocates the launching of a market of “sovereign bond-backed securities” — packaging different countries’ national debt into a new asset.
The logic is simple: combine all the debt from strong and weak countries into one big pool, eliminating the outliers on both sides, then tranche it out, and sell it based on required yield returns.
The post In Watershed Event, Europe Unveils Plan To Securitize Sovereign Debt appeared first on Silver For The People.
Source: http://silveristhenew.com/2017/05/30/in-watershed-event-europe-unveils-plan-to-securitize-sovereign-debt/
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