We've looked at RBS preference shares before as an indicator of how the UK is viewed. Yesterday they provided another salutory perspective.
On Monday, the Government effectively took over RBS, swapping the 12% prefs it took in October for ordinary shares. It's UK plc that stands behind RBS obligations now, and nothing else. RBS ordinary shares tanked, of course, but it was a holiday in the USA, so no trading there.
When markets re-opened, RBS regular dollar prefs (nominal 6.6% issue) fell more than 57%, and now yield 35.7% ! That's a measure of international confidence in our ability to service our debt.
The Man who Sold the Gold has reduced us to the merest junk.