By Rom Badilla, CFA – Bondsquawk.com
May 7, 2010
Germany approved their share of the rescue aid of around 22.4 billion euros ($28.5 billion) for the troubled Greece. According to a Bloomberg report, lawmakers voted 390 to 72 in favor of Germany’s share that will help Greece finance impending debt maturities as the debt heavy country is effectively shut off from the capital markets as borrowing costs soar. The bailout of Greece is essentially a bailout of German banks since European banks own roughly 80 percent of Greek debt claims.
Despite this and amid a global market decline, Greek bonds continue to tumble. 2-Year Greek bonds yields increased to 190 basis points to 18.27 percent. The yield on the 5-Year increased to 14.58, a change of 128 basis points while the 10-Year was slammed in trading as the yield spiked 114 basis points to 12.45 percent.
Greece Yield Curve 1-Day Change
Unfortunately, the buck doesn’t stop here as Portugal appears to be next on the list of sovereign risk red flags as bond yields are higher. The yield on the 2-Year is at 6.05 percent, an increase of 32 basis points. 5-Year yields finished trading at 6.08, an increase of 20 basis points while the 10-Year jumped 15 basis points to 6.29 percent.
Greece and Portugal’s equity markets, along with most of Europe’s, declined close to 3 percent.
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European Debt Recap – May 7, 2010
By Rom Badilla, CFA – Bondsquawk.com
May 7, 2010
Germany approved their share of the rescue aid of around 22.4 billion euros ($28.5 billion) for the troubled Greece. According to a Bloomberg report, lawmakers voted 390 to 72 in favor of Germany’s share that will help Greece finance impending debt maturities as the debt heavy country is effectively shut off from the capital markets as borrowing costs soar. The bailout of Greece is essentially a bailout of German banks since European banks own roughly 80 percent of Greek debt claims.
Despite this and amid a global market decline, Greek bonds continue to tumble. 2-Year Greek bonds yields increased to 190 basis points to 18.27 percent. The yield on the 5-Year increased to 14.58, a change of 128 basis points while the 10-Year was slammed in trading as the yield spiked 114 basis points to 12.45 percent.
Greece Yield Curve 1-Day Change
Unfortunately, the buck doesn’t stop here as Portugal appears to be next on the list of sovereign risk red flags as bond yields are higher. The yield on the 2-Year is at 6.05 percent, an increase of 32 basis points. 5-Year yields finished trading at 6.08, an increase of 20 basis points while the 10-Year jumped 15 basis points to 6.29 percent.
Greece and Portugal’s equity markets, along with most of Europe’s, declined close to 3 percent.