Turner: New Debt Plan for Greece but Same Old High Yields (15)

Yields on the Greek government’s brand new bonds are already trading at distressed debt levels — suggesting that despite February’s bailout package investors still see a strong chance that Greece will not be able to sustain even its much-reduced debt burden.

As the first week of trading closed, yields on the benchmark 10-years were at 18.24 percent — down from Tuesday’s closing high, but still the highest in the euro zone.

The new bonds have replaced old Greek paper, under a massive €206 billion ($273.5 billion) exchange program that swapped old bonds for new ones carrying lower coupons.

The high yields — the most elevated by far in the euro zone — reflect skepticism about whether the latest rescue deal, based on an orderly default of Greek debt, is enough to prevent a second default in the future. Last month private sector creditors reluctantly agreed to an effective default of 75 percent of the value of their debt, in a deal masterminded by euro zone finance ministers.


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Afternoon Updates:

12:02 pm EDT, March 18th, 2012 — A Greek bond deal that falls foul of fair

12:03 pm EDT, March 18th, 2012 — Debt in the U.S. will haunt us eventually

12:04 pm EDT, March 18th, 2012 — Norway SWF voted against Greek bond plan

12:05 pm EDT, March 18th, 2012 — Greek Banks May Not Need All Aid Earmarked By EU/IMF -Report

12:06 pm EDT, March 18th, 2012 — Greek Bailout Is Accompanied By Greek Resentment

12:07 pm EDT, March 18th, 2012 — Greek bank planned merger to be cancelled

12:08 pm EDT, March 18th, 2012 — IMF Head Christine Lagarde: Don’t Be Lulled Into ‘False Sense Of Security’

12:09 pm EDT, March 18th, 2012 — Tensions are running high in Coalition’s tug-of-war

12:10 pm EDT, March 18th, 2012 — For whom the drum rolls

12:11 pm EDT, March 18th, 2012 — Gas prices up for 9th straight day

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  • Jack

    It always comes back to “teeny, weeny” Greece doesn’t it?

    I wonder what they are going to do when Italy or Spain joins the club (which they will)?

    Diapers for “Merkozy” as they become incontinent anyone?

    My view: The EU is dead. They just refuse to believe their “lieing eyes”. It’s simply a matter of time. “Socialism” and all that.

    It can’t be saved (like the USSR and Cuba). Very bad idea.

    • Cy

      Add Ireland and possibly France.
      The EU will collapse because its economies are simply too different. Europe would divide nicely into about 3 federations, but Greece / Spain / Italy are economically closer to the 3rd world than “colonial” Europe and they need a much weaker currency than the Anglo-Saxon countries.

      I’ve always suspected the Germans knew this from the start and pushed for their inclusion into the union anticipating failure so they could get rights to land/resources via these IMF-style bailouts. Policy raises fewer eyebrows than Panzers.

      • Jack

        Agreed but I will add this. I suspect no hidden games here. As Warren pointed out today in a column they are just “stupid” and he’s correct.

        They refuse to see what is right in front of their face and that is a good thing for taxpayers everywhere.