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How fragile are debt holdings in EMU?

- "74% of Euro debt, issued by EMU residents, is held inside the Euro area and underlines that debt portfolio shifts are predominantly an intra-EMU story."
- "Intra-EMU non-resident debt holdings are a source of financial fragility for the periphery as rollover is likely to prove tough, especially in private sector debt."
- "Divestment risk from US and Japanese holders of € debt is interesting but ownership of the periphery is rather limited, tough illiquidity amplifies market impacts."
- "A dearth of data makes assessment of reserve manager shifts out of periphery paper hard to forecast, but this looks to be the trend. Caution on some core EGB names can rise but reserve managers are likely to increase exposure to the likes of Germany."
- "There little reason to think Bunds face a systematic risk of non-resident selling, unless the crisis envelops Germany to the point of much higher default risk."
RBS European Rates Strategy 20100625

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