Thursday, July 26, 2012

Ole' Queensland Bonds!

Campbell Newman this week somewhat wildly compared Queensland to Spain and suggested Queensland was on the verge of bankruptcy. At the same time, treasuer Tim Nicholls was in China apparently spinning a somewhat more positive view to investors. QTC has an investor booklet updated as at June 30, 2012 which reflects the positive story.

Consistent with previous posts here let's do a comparison of recent market history of the respective bonds. Here is Spain where bond yields have recently hit new highs:


Here is Queensland where the latest QTC weekly review says  "QTC long term bond yields fell to record low levels last week".

 

Now, we should be able to perceive a clear difference between the two here? Spain is suffering under increased funding costs, while investors continue to buy up highly rated Queensland debt. I haven't yet seen any comment on reduced funding costs?

My theory is that there is a geodetic phenomenon at play when politicians cross the equator and look at their graphs from the other side up, possibly while contemplating the reverse spiral of the water gurgling down the plug-hole of their hotel spa bath.
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