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.
[More]
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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
12:09 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
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.
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.
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.