Much postulation in the past couple of months about how ‘bond market vigilantes are dead.’ I think those that believe that ought to ask the governments of Greece, Portugal and Ireland. The cost for funding their ever-increasing debt is going parabolic.
Greek 10-year bond maturing May 19th now trading with a yield of 26% according to Bloomberg.
I’m pretty sure I have a credit card with less than 26% interest.
Greek 2-year bond at 14.7%.
April 27 (Bloomberg) — Greece is likely to default or inflict “significant” losses on bondholders unless it receives more generous terms on its planned aid package, according to Willem Buiter, chief economist at Citigroup Inc.
Suffering Greek Contagion Pressures EU Bonds
Portugal risks becoming the new Greece.
With a higher debt burden and a slower 10-year growth rate than Greece, Western Europe’s poorest country is being punished by investors as the sovereign debt crisis spreads. The risk premium on Portuguese bonds rose to more than double the past year’s average this month. Portugal’s credit default swaps show investors rank its debt as the world’s eighth-riskiest, worse than for Lebanon and Guatemala.
Meanwhile, the Greek stock market seems to be having a bit of trouble today. As of this writing, down over 6% on the day.
I’m sure it’s all contained though….like subprime….
UPDATE 11:26 AM ET:
Well, goodness, that didn’t take long:
GREECE SOVEREIGN CREDIT RATINGS CUT TO JUNK BY S&P
S&P CUTS PORTUGAL RATINGS TO ‘A-/A-2’; OUTLOOK NEGATIVE