Waiting to Grexhale

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By Kevin Grant McClernon Investors breathed a sigh of relief early last week. Greece reached an eleventh hour agreement  Tuesday with its international creditors to secure €240 billion in continued bailout funding. Its willingness to push the envelope has roiled financial markets in the past month. The yield on Greek 10-year government bonds rose as high as 11.21% this month before settling at 9.24% after trading Thursday. An increase in bond yields indicates fears that Greece may not repay its debt. Greek bond investors have reason to worry – a 2012 debt restructuring shed the face value of Greek debt by 53.5%, reduced interest rates, and extended maturities. In all, the debt lost 74% of its overall value. International investors now hold €370 billion in Greek debt – a similar restructuring would cost them about €270 billion. The new agreement gives Greece four months to act. In the meantime, investors will hold their breath once again.

Sources

http://bloom.bg/1stFtlm

http://on.wsj.com/1Ee0jLW

http://read.bi/1zUO02i

http://on.wsj.com/1aJRjU6

http://bit.ly/1M35O0K