As bonds slump, Juncker warns of sol­i­dar­ity lim­its

Kathimerini English - - Business & Finance -

Eurogroup chief Jean-Claude Juncker said yes­ter­day he re­mained op­posed to a to­tal re­struc­tur­ing of Greek sov­er­eign debt but Athens had to prove it was se­ri­ous about im­ple­ment­ing bud­get re­forms.

“Greece must know sol­i­dar­ity has its lim­its, if peo­ple get the im­pres­sion that the Greek side is lack­ing the nec­es­sary so­lid­ity,” Juncker told the Stuttgarter Zeitung daily.

“Greece now has the bur­den of proof in terms of so­lid­ity.”

Mean­while, Greek 10-year bonds slumped yes­ter­day on concern that a po­ten­tial re­pro­fil­ing of the nation’s bond ma­tu­ri­ties would de­ter the Euro­pean Cen­tral Bank from ac­cept­ing the debt as col­lat­eral.

The spread, or yield dif­fer­ence, be­tween bench­mark Greek debt and Ger­man bunds widened for a fourth day.

ECB Pres­i­dent Jean-Claude Trichet told fi­nance min­is­ters this week that should Greece be given more time to re­pay debt, the cen­tral bank would re­voke a spe­cial ar­range­ment un­der which Greek debt is ac­cepted as col­lat­eral.

“This fur­ther un­der­lines the clear di­vi­sions within euro- area of­fi­cial­dom as re­gards how to deal with Greece’s debt funk,” Richard McGuire, a se­nior fixed-in­come strate­gist at Rabobank In­ter­na­tional, told Bloomberg.

“A re­fusal to ac­cept Greek debt as col­lat­eral would re­sult in an un­sus­tain­able bout of illiq­uid­ity in the Greek bank­ing sec­tor. The mixed mes­sages un­der­pin the risk of fur­ther pe­riph­eral ten­sion as the mar­ket frets over this ap­par­ent pol­icy dis­ar­ray.”

Yields on 10-year Greek debt rose 23 ba­sis points to 16.03 per­cent. Two-year Greek note yields fell 17 ba­sis points to 24.82 per­cent.

Newspapers in English

Newspapers from Greece

© PressReader. All rights reserved.