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Greece'S Debt Default Risk Rose To 98% In The Next Five Years.

2011/9/13 9:41:00 36

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Greece Default On Debt In The Next Five Years

Greece is debt in the next five years.

Default

The possibility of a sharp rise to 98%, because the prime minister George Papandreou (George Papandreou) can not convince international investors believe that Greece can ride out the euro zone sovereign debt crisis.

"Everyone expects that Greece will default on its debt in the near future," said Peter Tchir, founder of TF Market Advisors, New York hedge fund. I think it will be a "hard event".

Obviously, the Greek government's austerity plan has not worked. "

According to CMA, a London data provider, it is now guaranteed that in the next five years, $10 million worth of Greek sovereign bonds will be paid up to 5 million 800 thousand dollars in default credit default swap contracts, up from $5 million 500 thousand in September 9th.

Portugal, Italy and France also rose to the highest level of credit default swap prices, with Portugal rising 79 basis points to 1213 basis points; Italy rose 40 basis points to 503 basis points; France rose 11 basis points to 189 basis points.

In the credit default swap, the price of the 1 base points is equivalent to $1000 per year, which can protect 10 million dollar bonds from default in five years.

Credit default swap is derived from credit card loans.

Financial derivatives

The products can be regarded as a kind of breach insurance for financial assets. Creditors can sell the debt risk through this contract, and the contract price is the premium.

The party who purchases the credit default insurance is called the buyer, and the party who takes the risk is called the seller.

The parties agree that if there is no default on the financial assets, the buyer pays the premium to the seller periodically, and if the breach occurs, the seller will bear the buyer's liability.

Assets

Losses.

Papandreou has pledged previously that he will adhere to the deficit target, which is the condition for the European Union and the International Monetary Fund (IMF) to provide loans to them.

But recently released data show that in the first 8 months of 2011, Greece's budget deficit increased by 22% in the total GDP share, thereby undermining Papandreou's commitment.

The yield on Greek bonds is heading for 70% in two years, and in the past 7 weeks, the stock market has shrunk by 1/3.

The Greek government is now predicting that the country's economy will fall by more than 5% this year, more than the European Commission's projected decline of 3.8%, because the country's fiscal austerity plan has deepened the recession for three years.

The euro fell to its lowest level since 2001 against the yen (105.34,0.0100,0.00%) because investors worried about the future of the euro zone.

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