Basel 2.5 meets the Sarkozy trade: new rules could hit bond demand

Irksome IRC


It's known as the Sarkozy trade – using the cheap three-year loans doled out by the European Central Bank (ECB) in December and February to buy government bonds, particularly those issued by a bank’s own sovereign. According to ECB data released at the end of April, Italian banks added €67.5 billion to their holdings of eurozone government debt in the four months from the start of December to the end of March, while Spanish banks added €77.4 billion – exactly what France’s former president

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