Greek debt blows out, EUR takes a hit

In light of the continued blow out in Greek bond yields, CDS and spreads versus German bonds, here is a chart of what it means for the EUR.   Unfortunately it’s not good news as it implies that EUR/USD should be trading closer to 1.20.   

The Eurostat report that Greece’s public sector deficit to GFP in 2009 was bigger than initially thought (13.6% compared to the original Greek government estimate of 12.7%) has done further damage.  Moody’s ratings downgrade of Greece to A3 dealt a further blow.  

This means that any attempt to reduce the deficit is now more difficult whilst the probability of a debt restructuring is growing , with rumours speculating that the haircut on Greek debt could be as much as 50%. 

Ouch.

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2 Responses to “Greek debt blows out, EUR takes a hit”

  1. Stav Says:

    Mitul, So is it a good time to visit Greece on vacation? With 50% off, I assume it’s a great to have a perm & extensions too

  2. Sara Says:

    Great chart, thanks


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