Sovereign debt is being contested in Greece, Ireland, Portugal and Spain ...

Banks and financial institutions in these countries are severely impaired.

Public and semi-State companies have been downgraded, even while showing positive balance sheets and operating statements.

Land duties, covered bonds, despite excellent collateral, have undergone significant and hardly justifiable discounts.

The gradual introduction of European federalism, which results in the creation of substantial support funds (EFSM, EFSF, IMF loans etc..), by way of a gradual decline in borrowing rates granted to countries in difficulty, operates in step with the considerable efforts made by the countries concerned. While it may seem tempting to favour the government loans from the peripheral countries, these measures may yet prove insufficient and the investment a risky one.

In this context, the profitable semi-States and covered bonds of the major local banks would seem to offer an opportunity for very attractive returns in terms of the overestimated risk. Even if the State were required to partially restructure its debt, there is reason to assume that these securities would not be involved