Greece down the pan — will Portugal follow?
Bond and stock markets worldwide plummeted following Standard & Poor's downgrade of Greece to BB+ yesterday and the inclusion in its rating report that bondholders could lose up to 70% of their holdings in the event of a default. There is no liquidity in the market with two year Greek bonds yielding 17.5% and the May 2010 issue 52% (up from around 30% yesterday). Portugal also had its debt downgraded, to A- from A+, resulting in 10 year yields surging by 50bp. Ireland, Italy and Spain also felt the pinch, their bond yields rising by 19bp-20bp. No decision on the EU/IMF rescue package is due until May 10 so the rollercoaster will continue. Read EuroWeek on Friday for up to date news and views on the unfolding European saga.
Jo Richards +44 20 7779 7315
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