Greek 10 yrs hit 350%??

Discussion in 'Financial Futures' started by Ivanovich, Apr 2, 2010.

  1. [​IMG]

    From the Financial Times and ZH. Is this a misprint? What the f?
  2. I think its the prior number appended to Greece. 3.5 something is probably the real number.
  3. I think it's in basis points, and the calculation gets screwed up because of it.

    3.5% above the referenced rate makes more sense.
  4. This is just an error in the FT (probably due to the fact that the EUR bond mkt was closed on Friday). This is immediately obvious from the number in the Germany row. How can Germany be trading at a spread to Bund, if Germany is Bund?

    Here's the table taken from their website ( for the 1st of April that looks a whole lot more sensible. All numbers are in %.

    What does ZH have to say about this?
    • ft.pdf
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  5. Recent 10-year rate for Greece has been about 6.2%
  6. That was before they went into the mkt to issue their new 7y...
  7. I don't know much about bonds but isn't 6.2% low for a country that is on the verge of default?
  8. Who said they're on the verge of default? How do you define default?
  9. The news -- Not being able to pay back your debt.
  10. Hmmmm, well, the news you have been listening to are portraying the situation not altogether accurately and altogether too simplistically.

    There's a whole variety of ways to "not be able to pay back your debt". For example, if they promise to pay off 80% of their debt outstanding, what does that mean for the yield? What about 60%? What if they ask for a "standstill", like Dubai supposedly did at one point? Even if there is a Greek credit event, there's a whole lot of complexity, which is exacerbated by the fact that there's no accepted universal protocol for sovereign defaults (the IMF tried to create one, but the mkt didn't like it).

    However, even before we get to the point where a credit event occurs, here's some more complexity for you. What do you think is the likelihood Greece will be allowed to default on its Euro-denominated debt by the EU and/or the IMF? What do you think is the likelihood that Greece unilaterally exits the EMU and re-denominates all its debt into a new Greek ccy, Drachma2.0? How do all these possible outcomes affect Greek bond prices and how does that translate into yields (it's no longer a simple dynamic)?

    The point I am trying to make is that the current yield on 10y greek guvvies reflects the mkt's view of the distribution of probabilities among various events, some of which I mentioned above. If you disagree, there's a mkt out there.
    #10     Apr 3, 2010