by Calculated Risk on 12/20/2011 09:41:00 PM

• From the NY Times: Successful Spanish Debt Auction.

The E.C.B.’s new [long-term repo operation] facility [makes] it possible for banks to borrow from the central bank to fund purchases of government bonds. ... The E.C.B. will announce the results of its three-year liquidity injection on Wednesday morning, and there is wide uncertainty over the degree of demand. In a Reuters poll, traders estimated banks would ask in aggregate for as little as €50 billion to as much as €450 billion.

It is likely the banks are using the ECB's 3 year long-term repo operation to buy debt. Some analyst have called this a "backdoor eurobond".

The Spanish 2 year yield is down to 3.35% - the lowest level since August, and the 10 year yield is down sharply to 5.31% - the lowest since October.

The Italian 2 year yield is down to 4.97% - the lowest level since October, and the 10 year yield is down to 6.61%.

• From the WSJ: Greece Nears Deal With Private Creditors

Greece is close to an agreement with its private-sector creditors to restructure the country's debt, Finance Minister Evangelos Venizelos said. ...Mr. Venizelos said separate negotiations on the new €130 billion bailout would begin on Jan. 16, when European and International Monetary Fund officials return to Athens to hash out details of the new program.

There are the next two hurdles for Greece.

• From the WaPo: IMF calls Irish rescue ‘fragile’

Exports, critical to the small country’s success, are declining. And the weight of outstanding bank debt is making it hard for Ireland to meet the financial targets laid out under the joint IMF-European Union rescue program ... “We have not ruled out success at this point,” Craig Beaumont, the IMF’s mission chief for Ireland, said in a conference call. But “additional support would reinforce the program and improve the prospects.”

That has to be the quote of the day: "We have not ruled out success ..."

Earlier:
• Housing Starts increase in November
• Multi-family Starts and Completions, Record Low Total Completions in 2011
• A comment on Existing Home Sales revisions