Get five times return on Greek bonds..or wait, are yields meaningless now?

Yields of 1 Yr Greek bonds is now above 400% which means if you invest in Greek bonds now, you will get five times your money next year. But, even at such high yields, there are more sellers of the Greek bonds than the buyers today. That means investors are almost certain that Greek wouldn’t survive the severe breakdown of Greek economy in one year. This does not mean that investors wont get their money back. Its just that they would get their money back after axed principle which might be between 50% to 75% haircut or if Greece leaves EU and eventually devaluates its currency, their might not be even 75% of the value of investment left after that. So, that is preciously the reason why even 2×400% yield is meaningless here.

sovereign debt  Greece 2012-01-13 

Hitesh Anand

I am a post graduate from Newcastle University, UK. I like studying and analyzing economic data and financial health of world.

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