The proportion of Spanish and Italian public debt held by non-resident investors continued to fall in the first quarter of 2012 as banks funded with cheap ECB money replaced international institutional investors, according to Fitch Ratings. We expect this trend to continue in the coming quarters. The pace of the withdrawal by non-residents quickened in Spain, where we estimate that non-resident holdings of Spanish public debt, excluding ECB holdings under the Securities Markets Programme, dropped to 34% in Q112, from 40% at end-2011. It has been dropping steadily from over 60% in 2008. The drop in private-sector ... (full story)