So, the basis of the agreement is a 50% cut in the face value of Greek bonds held by private creditors. The agreement will reduce Greek debt level to 120% of GDP by 2020.
Posts Tagged ‘Greece’
Looks like meltdown is averted; ECB will probably announce further bond purchases on it’s tomorrows Governing Council meeting.
Portugal managed to sell €500 of 12-month bills at bid-to-cover ratio of 2.5 times despite S&P negative credit watch issued yesterday.
Waiting for another ride in a few months…
Spain, Italy and Ireland at new record highs. Markets in panic mode.
I don’t see any other way how this could be reversed (meltdown prevented) except ECB bond purchases.
Spain 10 year government bond spread vs. it’s German peer reached new high of 255 bps. Irish bond spread reached record high of 654 bps.
Markets have lost faith in EU bailout plan and are now finding out (again) that math is quite exact science. CNBC Europe has even sent it’s anchor to Lisbon to provide live coverage of Portugal bailout; they were wrong: the markets skipped Portugal and moved to big story – Spain. Spain has a funding requirement of at least €155bn in 2010. Looks intimidating, especially if we took to account the fact that Ireland was pre-funded for the first half of the 2011 and despite that needed a bailout.
This puts the markets near the point where the only solution is the Ben Bernanke way – buy worthless paper and stuff cash in monetary system. I would do it fast, but I doubt on EU leadership determination. In any case, more the ECB waits the situation will get worse.
While we wait to see whether Ireland will be bailed out today I’ll post todays interesting reads…
I’ll interrupt my blogging silence with a short update on markets. Usual service continues as scheduled on Monday.
Looks we have trading themes reversing course.
Market summary: Shanghai down; U.S. Dollar up; PIGS spreads record wide…
Initially Greece planed a under 3% deficit, then they were reporting 6% , it was 12 % a month ago, and now its 15%. Bloomberg story: Greek Bonds Tumble as Government Says Tax Revenue Falling Short. Spreads wider… Chart 1. Greece vs. Germany 10 Year Government Bond Yield Spread
New highs today for Irish and Portuguese 10 year government bond yield spread versus same maturity German. Greece yields off recent highs. ECB is not managing to put this under control. Chart 1. Ireland vs. Germany 10 Year Government Bond Yield Spread Chart 2. Portugal vs. Germany 10 Year Government Bond Yield Spread Chart 3. Greece vs. Germany [...]
Irish 10 year government yield spread versus same maturity German issue rose today to new highs. Both Barclays Capital and Goldman Sachs issued their reports in the last couple of days claiming it is not clear whether Ireland can finance its budget deficit without EU/IMF help. On Friday ECB intervened buying Irish government bonds. FT story: ECB intervenes in [...]
Yield was at 4.82 vs. 4.65 on July 13. Mighty high as Greece supposedly received 2-year fully funded bailout package. German 6-month rate is at 0.43%.
Extension of European debt problems returned as a mayor concern this week. Most notable problem is, off-course, much hyped Ireland’s banking system nationalization. Latest leg included spiting up Anglo Irish. Bloomberg: Ireland’s Burial Plan for Anglo Irish Keeps Cost Question Alive. Irish 10 year government yield spread versus same maturity German issue moved to new highs. Chart 1. Ireland vs. Germany [...]
A kind of uneasy feeling surrounds markets today and I can see only negatives on the horizon: Japanese Yen and Australian dollar – currencies involved in financing equity bets moved against financing users. Peripheral Europe bond spreads rose in recent weeks; Greek are even close to pre-bailout levels. Hungarian Forint vs. Swiss Franc again close to all [...]
I already wrote that Greece returning to financial markets despite receiving fully funded bailout is a stupid idea: Greece Returns To Financial Markets. Apparently idea to issue 1-year bills was scraped and they are planing to issue 6-month notes. Reuters story: Greece to sell 1.25 bln eur of 6-mth T-bills July 13. Greece will auction 1.25 billion euros ($1.58 [...]
I’ve argued the same thing repeatedly. Financial Times Opinion: Greece’s best option is an orderly default. It is time to recognise that Greece is not just suffering from a liquidity crisis; it is facing an insolvency crisis too. Rating agencies have started to downgrade its public debt to junk level, while spreads on Greek sovereign bonds [...]