The securities unit of London-based Barclays PLC told analysts yesterday not to use the acronym for Portugal, Italy, Ireland, Greece and Spain in notes to clients, according to a memo obtained by reporters. The mandate from Valerie Monchi was sent to research staff.
The PIIGS nickname has grown increasingly popular in the last month as investors dumped assets in the euro zone’s smaller economies on concern the countries will struggle to control budget deficits. Stocks in Spain and Portugal slumped the most since 2008 yesterday, while yields on Greece’s 10-year bonds and Portugal’s two-year securities have jumped to the highest levels against German bunds since the late 1990s.
“By denigrating a nation in the process of trying to describe a financial situation, it sort of puts the people in that country behind the eight ball,” said Peter Sorrentino, a senior money manager at Cincinnati-based Huntington Asset Advisors who is visiting Italy in March.
His firm oversees US$12.8 billion.
“It serves no one’s interest. We’re all in the same boat together,” Sorrentino said.
Investment banks from Citigroup Inc to JPMorgan Chase & Co, both based in New York, have used the term in research reports. There were no instances of it in Barclays notes obtained by reporters.
“The PIIGS remain front-and-center,” analysts led by Adam Crisafulli of JPMorgan in New York wrote in a report yesterday.
CLSA Asia-Pacific Markets analyst Christopher Wood recommended a “PIIGS widening spread trade” in a report last June.
Mark Lane, a spokesman for Barclays in New York, declined to comment. So did Duncan Smith of Citigroup and Brian Marchiony of JPMorgan.
Portugal’s public debt will rise to 91 percent of GDP by next year from 77 percent last year, European Commission forecasts showed. More than one in three Italian households that got a mortgage to buy a residential property is struggling to meet the loan repayments, a study from Bologna-based research center Nomisma showed yesterday.
Ireland’s economy shrank 7.5 percent last year and the government is cutting spending to reduce a deficit that widened to 11.7 percent of GDP last year, almost four times the EU limit.
Greece’s debt will increase to 135 percent of GDP, from 113 percent, and Spain’s will climb to 74 percent from 54 percent, the European Commission estimates. Greece faces opposition to proposed deficit cuts, with its biggest union set to approve a mass strike, the second scheduled for this month.
Usage of PIIGS grew following the rise of the BRICs acronym for Brazil, Russia, India and China, coined by Goldman Sachs Group Inc chief global economist Jim O’Neill to describe four of the world’s biggest emerging markets.
The Web site of the Humane Society of the United States describes pigs as “highly intelligent, curious animals who engage in complex tasks and form elaborate social groups.”
Wikipedia says they eat any food, including worms and tree bark.
“If there’s a cute nickname to use so you don’t have to say five names out loud over and over again, that’s fine with me,” said Julius Ridgway, a financial adviser at Medley & Brown LLC, which oversees about US$400 million in Jackson, Mississippi. “It’s just silly.”
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