China has pledged to buy at least $6 billion worth of Spanish debt this year, according to Reuters, citing Spanish newspaper El Pais.
That the country would keep buying PIIGS debt has been stated multiple times. This is the first time we recall a hard number.
That’s not nothing… it’s been estimated that Spain’s total borrowing for the year would be about $47 billion, so $6 billion is something, but it’s not having any serious impact on markets. Spanish yields are actually wider on the day. Stocks are lower again.
The bottom line: While it’s great that China will chip in, it doesn’t alter the fundamental solvency outlook.
To do that, Spain will need to keep having more months like it did in December, when unemployment improved, and the deficit came in better than expected >