Fears Mount Of Greek Default

Written by FrumForum News on Saturday June 18, 2011

Bloomberg reports:

Greek bonds plunged, driving yields on the nation’s two- and 10-year securities to records, as Prime Minister George Papandreou’s failure to win parliamentary support for more austerity fueled speculation of a default.

Greek 10-year bonds fell for the second consecutive week, driving the yield difference, or spread, between the securities and similar-maturity German bunds to an all-time high. The debt rallied yesterday after German Chancellor Angela Merkel retreated from German demands that bondholders be forced to bear a “substantial” share of a new rescue for Greece. Standard & Poor’s cut Greece’s credit rating to CCC from B on June 13.

“There are still concerns that the Greek situation won’t get sorted,” said Eric Wand, a fixed-income strategist at Lloyds Bank Corporate Markets in London. “The overwhelming concern over possible contagion is weighing on Portugal and Ireland.”

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