Greek Default Risk Markets Stable

Greek Default Risk Markets Stable.

The cost of the Greek Government borrowing money has risen from just under 4% to 27% on financial markets. In simple terms, interest rates the Greek Government must offer in order to borrow money are now at 13% overall.

The Greek Government is also due to repay over €4bn of debt by the end of the month. It is looking to renegotiate terms with its creditors and rumours abound that Greece has asked or will ask for a delay in repayment of ths debt due now. In addition, German Finance Minister Wolfgang Schaeuble has suggested that Greece will find it difficult currently to borrow further monies from Europe or the IMF and talk is off trying to get Russia or China i.e. countries outside of the European Union to lend it money.

Despite all these concerns, markets in the UK are still holding.

Comment

We do not see any deal being agreed in the next few days. We see this as a dangerous position.

Make no mistake, if the rumours of Greece asking to defer repayment of a debt, this is a default. We suggest markets are artificially high given the concerns around the globe for Greece and we remain on “red” investment alert status for the time being.