Thursday, March 4, 2010

Trust, but verify. Greece finds they can sell bonds, at the right price

It can be done!  Greece sold 5billion Euros worth of 10year debt at about 6.4% today, and there were three times as many bidders as there were bonds to go around.  It looks like investors do trust Greece with their money, as long as the price is right.  Along with the debt sale, here is the loose plan for Greece's attempt to reduce their budget deficit to 3% of GDP by 2012:

The price here is being called "crippling" for Greece, which must roll over $72billion in debt this year, likely at these much higher yields than they've enjoyed over the past decade.

The Greeks are horrified at having to offer double the yield that Germany does on it's ten year debt.  That is similar to a 20year old burger flipper being outraged that the credit card company charges him a higher rate than the owner of the burger franchise...they're simply different credit risks.

The WSJ put out a marvelous piece yesterday on the total laugh-fest that was the "austerity" required for Greece to gain acceptance into the EU monetary union.  It has been revisions and accounting fraud from day one.

Copyright 2010 AlphaNinja

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