http://www.bloomberg.com/apps/news?pid=20602095&sid=abyuK6ASd.T0&refer=govt_bonds
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Greek Downgrade Triggers Surge in European Government Debt Risk
Jan. 14 (Bloomberg) -- The cost of hedging against losses on European government bonds jumped as Standard & Poor’s cut Greece’s credit rating after threatening to downgrade Ireland, Portugal and Spain.
Credit-default swaps tied to Greek debt jumped 18 basis points to 250 after S&P lowered its long-term grade one step to A-, according to CMA Datavision prices at 2:45 p.m. in London. Contracts on governments throughout Europe rose.
“The ongoing global financial and economic crisis has, in our opinion, exacerbated an underlying loss of competitiveness in the Greek economy,” S&P analyst Marko Mrsnik said in a statement today.
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“The peripheral countries are coming under pressure,” said Ian Stannard, a currency strategist at BNP Paribas SA in London. “Given the huge supply of bonds that’s due, this is going to make things more tricky. It’s going to leave the euro extremely vulnerable.”
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Greece was put on watch for a possible cut by S&P on Jan. 9 as sliding support for the government hampers the country’s ability to ride out the economic crisis. The same day, the ratings firm lowered the outlook for Ireland’s debt to “negative” from “stable.”
Portugal yesterday became the third euro nation in a week to be threatened with a debt downgrade when S&P’s said the country’s long-term rating may be lowered from AA-. Spain faces “significant challenges” and may have its top AAA rating lowered, the ratings firm said Jan. 12.
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There is an “increasing disparity and deterioration in the quality of European sovereigns,” Emma Lawson, a currency strategist in London at Merrill Lynch, wrote in a report yesterday.
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Spanish Finance Minister Pedro Solbes said Jan. 13 that the country’s budget deficit will “substantially” exceed the European Union’s limit of 3 percent of GDP this year.
Europe’s downturn may take the biggest toll on countries already saddled by debt. Italy’s burden rose to 109 percent of gross domestic product in October, the highest in the euro region, and the International Monetary Fund in Washington estimates that will limit Prime Minister Silvio Berlusconi’s ability to revive the economy.
No wonder people are buying up US treasuries.
Quote:
Greek Downgrade Triggers Surge in European Government Debt Risk
Jan. 14 (Bloomberg) -- The cost of hedging against losses on European government bonds jumped as Standard & Poor’s cut Greece’s credit rating after threatening to downgrade Ireland, Portugal and Spain.
Credit-default swaps tied to Greek debt jumped 18 basis points to 250 after S&P lowered its long-term grade one step to A-, according to CMA Datavision prices at 2:45 p.m. in London. Contracts on governments throughout Europe rose.
“The ongoing global financial and economic crisis has, in our opinion, exacerbated an underlying loss of competitiveness in the Greek economy,” S&P analyst Marko Mrsnik said in a statement today.
Quote:
“The peripheral countries are coming under pressure,” said Ian Stannard, a currency strategist at BNP Paribas SA in London. “Given the huge supply of bonds that’s due, this is going to make things more tricky. It’s going to leave the euro extremely vulnerable.”
Quote:
Greece was put on watch for a possible cut by S&P on Jan. 9 as sliding support for the government hampers the country’s ability to ride out the economic crisis. The same day, the ratings firm lowered the outlook for Ireland’s debt to “negative” from “stable.”
Portugal yesterday became the third euro nation in a week to be threatened with a debt downgrade when S&P’s said the country’s long-term rating may be lowered from AA-. Spain faces “significant challenges” and may have its top AAA rating lowered, the ratings firm said Jan. 12.
Quote:
There is an “increasing disparity and deterioration in the quality of European sovereigns,” Emma Lawson, a currency strategist in London at Merrill Lynch, wrote in a report yesterday.
Quote:
Spanish Finance Minister Pedro Solbes said Jan. 13 that the country’s budget deficit will “substantially” exceed the European Union’s limit of 3 percent of GDP this year.
Europe’s downturn may take the biggest toll on countries already saddled by debt. Italy’s burden rose to 109 percent of gross domestic product in October, the highest in the euro region, and the International Monetary Fund in Washington estimates that will limit Prime Minister Silvio Berlusconi’s ability to revive the economy.
No wonder people are buying up US treasuries.