Greece is in debt, to the point where its desperate citizens have taken to the streets in protest. Fitch recently downgraded the nation’s credit rating to BBB-, which is among the lowest scores available. The European Union might make debt relief possible for Greece, but only if they’re prepared to contribute many billions of Euros within the name of Greece’s debt. Greece must borrow to repay their debt by May 19, but this will be a lot more difficult than ever, now the Greece debt has been saddled with junk status, as outlined by Sky News Online . Hence, those who hold 10-year Greek sovereign bonds are demanding a lot more than a 10 percent interest rate of return from Greece’s government. That’s the highest ever recorded within the eurozone, as outlined by Sky News.
How junk rating makes Greece debt bad for investors
As a result of the junk rating applied to the Greece debt and also the application of the debt to Greek bonds, Sky News states that “big investors such as pension funds will no longer be allowed to buy the country’s debt.” The timing couldn’t be worse; Greece has massive debt that will drag them down to the financial level of Colombia, Romania or Azerbaijan. Greek citizens are waging protests daily, as job seekers assemble outside the finance ministry in desperation. Economists like Koen De Leus of KBC Securities tell Sky News that if a solution for how to deal with Greece’s debt is not in place soon, the entire European market will be dragged down. The euro is already down to a new one-year low against the dollar, while stock markets across the European Union have dropped substantially. The ripples even dropped the Dow Jones by 200 points yesterday.
Greece will pay debt ‘absolutely and without any doubt,’ says Papaconstantinou
Finance Minister George Papaconstantinou claims Greece will settle debt by the Might 19 deadline, but investors have proven to be less than confident of this proclamation. Alistair Darling, Britain’s Chancellor of the Exchequer, exclaimed before the International Monetary Fund, European Central bank and other financial conglomerations that it is “absolutely essential” the problem of Greece and debt be handled with expediency. Will Greece handle their debt with a lot more than payday loans from the European Union?
Article Resources
Sky News Online
http://news.sky.com/skynews/Home/World-News/Greeces-Sovereign-Debt-Downgraded-To-Junk-Status-Sending-Stock-Markets-Tumbling/Article/201004415621202?f=rss
