Slightly declining yields and good demand: the latter Greek bond auction it went pretty well. This morning the Treasury of Athens placed government bonds in three months for 1,625 billion euro. This was communicated by the Pdma debt agency, specifying that the return was equal to 4,64%, from 4,68% in the last auction. The bid-to-cover remained at 2,9.
This type of very short-term placement is the only tool currently available to Greece to refinance its debt. The country was in fact cut off from the bond market in 2010.
Although the situation is still in the balance, today the Athens coffers were rejected without appeal. According to the head of European sovereign ratings of theFitch rating agency – Edward Parker, interviewed by Bloomberg -, soon Greece will be destined to declare default.
Pessimism has been rampant since last week i negotiations between the Government of Athens and the Institute of International Finance, which brings together the banks that hold Greek bonds. Tomorrow the two sides will sit around the negotiating table again.
They just stay 46 days to avoid crack: A €20 billion bond that Greece may not be able to repay expires on March 14,4. But even if the agreement to impose losses on private creditors goes through, this same agreement would amount to a declaration of insolvency and would be treated as a technical default by the rating agencies.
At that point, according to most analysts, market speculation would go straight to Spain and Italy, risking pushing the cost of their refinancing beyond any sustainable threshold.
