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 accessible. The European Union may make debt relief possible for Greece, but only if they’re prepared to contribute numerous billions of Euros in the name of Greece’s debt. Sky News Online reports that while Greece may have to borrow in order to cover its 8.5 billion-euro debt – which comes to maturity on Might 19 – Greece’s national debt now bares the albatross of junk status. Hence, those who hold 10-year Greek sovereign bonds are demanding more than a 10 percent rate of interest of return from Greece’s government. Sky News reports that this massive interest rate is the highest ever seen in Europe.
Greece debt equals junk and high risk to investors
Sky News indicates that junk status for the Greece debt places “big investors such as pension funds” in a position where they “will no longer be allowed to buy the country’s debt.” The timing could not 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 manage Greece’s debt is not in place soon, the entire European market could be dragged down. The euro has already suffered of late in comparison to the American dollar (hitting a new one-year low) and European Union stock markets have faltered. This impacted the Dow Jones as well, which experienced a 200-point drop by the end of trading.
Papaconstantinou says Greece will pay debt ‘absolutely and without any doubt’
Instilling investor confidence is always significant, but not every person believes Grecian Finance Minister George Papaconstantinou’s optimism that Greece will cover debt by the May 19 deadline. 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” that the problem of Greece and debt be handled with expediency. Will Greece manage their debt with more than payday loans from the European Union?
Sources for the article
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
