Greek German Bond yield Spread grows
The extra yield that investors demand to hold Greek 10-year bonds over German equivalents is now 902 basis points, compared with 785 basis points at the end of June. Greek 10-year debt yielded 11.24 percent today. The Spanish spread is at 173 basis points, Portugal’s is at 331 basis points and Ireland’s is at 340 basis points.
The premiums investors charge to hold Spanish and Irish debt over German bunds are wider than before the EU announced its rescue package on May 10.
The euro slumped 21 percent from a November 2009 peak through a June trough this year as the threat of contagion from Greece’s financial crisis prompted investors to sell other euro- region assets. The country ran up a budget deficit of 13.6 percent of GDP last year on debt of 115.1 percent of total output, the European Commission estimated in May. Greece’s debt will swell to 124.9 percent this year, the commission said.
Greece still faces a “substantial” default risk as insolvency prevents the nation from repaying its debt when its bailout program expires in three years, Pacific Investment Management Co. fund manager Andrew Bosomworth said.