Greece’s Third Bailout Seen in Debt With Junk Grade: Euro Credit
- So much for the 2nd bailout of Greece. The talk is now of a 3rd bailout and the 2nd bailout has barely started !
Greece’s Third Bailout Seen in Debt With Junk Grade: Euro Credit!
By Paul Dobson, http://www.bloomberg.com/
Greece’s bonds and credit ratings are factoring in a third bailout for the nation that analysts and investors say will require greater concessions from its international creditors.
Within a week of euro-area member states giving their formal approval to a second bailout package for Greece, the International Monetary Fund said the country may require additional funding or a further debt restructuring. Pacific Investment Management Co., which runs the world’s biggest bond fund, said it remains “cautious” on euro-area government debt even after the largest-ever sovereign refinancing because the risk remains that Greece will leave the single-currency area.
“It’s still a very steep mountain to climb,” said Harvinder Sian, a senior fixed-income strategist at Royal Bank of Scotland Group Plc in London. The restructuring deal“doesn’t do anything to put Greece on a sustainable path,” he said. “A third bailout will become necessary.”
The price of Greek government bonds maturing in February 2042 that were provided as part of its debt exchange was at 21.48 cents on the euro at 8:04 a.m. London time, with yields at 15.02 percent. Standard & Poor’s said on March 15 it rated the securities CCC, its fourth rank above default, citing questionable growth prospects, a weakening political consensus to implement budget cuts, and a “still large” debt burden.
Sellers of credit-default swaps on Greece will have to pay as much as $2.5 billion to settle contracts triggered by the nation’s debt restructuring, an auction determined yesterday.
Yields on Portuguese bonds due in 2037 were at 11 percent, with the price at 41.835 cents. The securities are rated BB by S&P, six steps above the new Greek securities.
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