EUROPEAN traders are warning that markets face a second debt crisis within the first half of the year.
Banks in Europe must refinance about €400bn of debt in the first six months of the year.
But the European governments must replace €500bn over the same period, as well as hundreds of billions of euro of mortgage-backed debt maturing.
"What we are looking at here clearly has the potential to become a second credit crunch. However, this time it would be much worse than before," said Celestino Amore, founder of IlliquidX, which specialises in trading hard-to-price debt.
The trader anticipates a rush to sell assets, much like that which kicked off the first credit crunch in the summer of 2007.