Week of July 10, 2011 thru July 16, 2011

Bank of Mexico to Sell $2.1 B in 5-yr Syndicated Peso Bonds

By Nacha Cattan

MEXICO CITY (MNI) - The Bank of Mexico Friday said it will issue up
to 25 billion pesos ($2.1 billion) in 5-year bonds Wednesday using a
syndicate of banks.

The central bank said the interest rate on the bond maturing June
2016 is 6.25%. The bank will receive bids Wednesday between 12:45 and
1 p.m. Central Time.

Mexico began selling syndicated peso bonds in February 2010 in an
effort to increase liquidity in the secondary market to attract foreign
investors. The mechanism was also meant to help Mexico enter Citigroup's

Analysis: Bank Stress Test "Pass" Doesn't Mean Clear Sailing

By Peter Koh

BRUSSELS (MNI) - The fragility of Europe's banks and the sovereign
debt crisis are firmly intertwined. First, collapsing banks strained
government budgets; now, the poor fiscal health of governments is
weighing down the banking sector by raising funding costs.

TheFXSpot: Stress Tests Over;US Budget Negs Keep Risk Furtive

By Vicki Schmelzer

NEW YORK, July 15 (MNI) - European bank stress test results,
showing that only eight of 90 banks received a failing grade, provided a
modicum of relief and led to furtive risk positioning Friday, but
ongoing U.S. fiscal uncertainty prevented a larger risk rally.

FXWRAP: Dlr Flat, Unstressed By Stress Tests And Ratings Action

By Dennis Pettit

NEW YORK, July 15 (MNI) - The dollar was holding about unchanged
vs. the euro and the yen in afternoon dealings Friday, the currency
market Friday juggling various conflicting developments before retiring
for the weekend.

Euro-dollar was changing hands at $1.4140 in afternoon dealings
Friday, the euro about the middle of the day's $1.4092/1.4185 range of
the U.S. session and not far removed from its starting level of the day.

Similarly, dollar-yen was holding at Y79.07 in afternoon dealings

EBA Chief Enria: Sov Crisis Worsened Since Test Scenario Set

--Says Regulators Should Call On Near Fails To Bolster Capital
--Says EU Banks Under Severe Strain

LONDON (MNI) - The EU-wide stress tests released today should help
reduce market uncertainty, European Banking Authority Chairman
Andrea Enria said here today.

The EBA chief, however, admitted that the sovereign debt situation
had deteriorated in recent weeks and that this had impacted adversely on
the risk outlook for EU banks.

"The tests should reduce market uncertainty," Enria said, but added
later during a press conference here that "We are aware that the risk

Update: EBA: Mainly Domestic Banks Exposed To EMU Sov Risk

--16 EU Banks Pass Tests By Narrow Margin, Including Two German

LONDON (MNI) - The European Banking Authorities data show it is
very much domestic, rather than foreign banks, that are exposed to
sovereign risk in the troubled peripheral eurozone countries.

The EBA broke down Greek sovereign exposures by counterparty
countries. Its figures show 67% of Greek sovereign exposure is for Greek
banks and it is a similar picture in Ireland and Portugal.

The next largest share of Greek sovereign exposure is for German

EBA: Largely Domestic Banks Exposed To EMU Sovereign Risk

LONDON (MNI) - The European Banking Authorities data show it is
very much domestic, rather than foreign banks, that are exposed to
sovereign risk in the troubled peripheral eurozone countries.

The EBA broke down Greek sovereign exposures by counterparty
countries. Its figures show 67% of Greek sovereign exposure is for Greek
banks and it is a similar picture in Ireland and Portugal.

The next largest share of Greek sovereign exposure is for German
banks, with 9%, France 8% and then Cyprus at 6%. Other shares are tiny,
with UK banks at 2% and Italian banks just 1%.

Schaeuble: Germany's Bank Sector Needs No Further Adjustments

BERLIN (MNI) - German Finance Minister Wolfgang Schaeuble said
Friday that no further adjustment in the country's banking sector is
necessary after the stress test results released today.

EBA: 8 Of 91 EU Banks Failed To Pass Stress Tests

LONDON (MNI) - Eight of the 91 EU banks tested in the European
Banking Authority's 2011 stress tests failed to pass those tests, the
EBA said Friday.

"Eight banks fall below the core the capital threshold of 5% Core
Tier 1 Ratio over the two-year time horizon, with an overall CT1
shortfall of E2.5 bln... Sixteen banks display a CT1R of between 5 and
6%," the EBA said.

Five Spanish banks, two Greek banks and one Austrian bank failed
the tests.

One Greek bank failed with a core tier one ratio of under 2%.

US Swaps: Mixed, Spread Curve Turns Flatter

By William Sokolis

CHICAGO, July 15 (MNI) - Spreads opened mostly tighter Friday, but
turned mixed ahead midday as the front end forged wider, rates markets
bounced amid talk that all UK banks had passed the EU stress tests.