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Greece: the market is testing the patience of Europe

Greek interest rates continue to climb. They achieve this Thursday morning the world record to 7.49% on bonds with 10 years more distant than ever from the benchmark, the German Bund. The rates at 2-year yields have exceeded long, touching 7.80%, suggesting the market concerns over the short term. The news from Athens did not contribute to calm markets, while the Board of Governors of the European Central Bank (ECB) was to meet Thursday.

The cost of insurance on compulsory Greek (CDS, credit default swaps ") also jumped Thursday morning, also reaching record levels at more than 470 basis points, the credit information specialist CMA News. "The market moves very quickly," says Markit News on Twitter.

Greece is still contineur to borrow, said Thursday morning the Greek Finance Minister George Papaconstantinou before Parliament.

Contamination

"The Greek problem begins to contaminate other peripheral markets such as Spain and Portugal, where the rates differ from the Bund," says Patrick Jacq, a strategist at BNP Paribas rate, which emphasizes that the volumes traded bonds Greek since Thursday morning are very low. "As regards Greece, the current movements are not yet dramatic macroeconomic consequence.Athens has enough to cope with higher current levels, which represent, in the case of bond issuance, an additional cost after all low in comparison to 10 billion euros to be in the coming weeks. "

After rumors of Greek opposition to the conditions of the International Monetary Fund (IMF) in case of intervention, the Greek banks are finding themselves the center of attention. The Financial Times reports that in a recent face withdrawals totaling 10 billion euros since the beginning of the year. It does not take more than some analysts to fear a flight of capital.

Testing the limits

But the sudden movement on the debt market would also be Greek, or even primarily, due to investors forced to sell the Greek titles of their portfolio because of excessive volatility.Investors also want to test the rescue plan put together by the European Union, and know from what level of rates will be raised.

This is a matter of weeks, said Laurent Bilke, Europe economist at Nomura. He said the level of rates and especially the volatility in the market make it impossible to bond issue in the short term. Nothing, however, should occur before the regional elections in Germany in Westphalia on May 9, given the opposition of the public to any plan for Greece.

In this tense context, the ECB president, Jean-Claude Trichet, should be questioned about the crisis in Greek at the monthly press conference on Thursday."He should face questions on media reports that the ECB considers to be both too vague in terms of European aid and inappropriate intervention by the IMF," say economists at Societe Generale in a note.

See also:

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