Investors increase bets that Greece, Ireland and Portugal may restructure their debts as they become more discriminating about European creditworthiness, according to Bloomberg.
The average annual cost of protecting of Greek, Irish and Portuguese bonds in the credit-default swaps market for five years exceeded the average of Spanish and Italian contracts by a record $496,000 this week.
That’s up from $384,000 on Feb. 2 and $77,000 a year ago. Swaps on Greece signal a 60 percent probability of default in five years, while Spain and Italy survive the euro region’s deficit crisis.
Following Greece’s downgrade by Moody’s earlier this week, the division between peripheral nations widened and fueled speculation that the European Union will fail to agree on a comprehensive package to end the crisis, said Bloomberg.
Traders are betting Spain will avert an EU bailout as budget cuts and growth help repair its balance sheet.
Although Moody’s cut Spain’s credit rating on Thursday, the country’s growth trajectory “looks more reassuring than that of Greece and Portugal”, according to Moody’s analysts.
“We think that Portugal is likely to double-dip, while growth in Greece should remain in negative territory”, they added.
Investors note that Greece will inflict losses of about 50% on investors and extend bond maturities by 5-10 years in a series of moves to reduce its debt, according to Bloomberg.
The average annual cost of protecting of Greek, Irish and Portuguese bonds in the credit-default swaps market for five years exceeded the average of Spanish and Italian contracts by a record $496,000 this week.
That’s up from $384,000 on Feb. 2 and $77,000 a year ago. Swaps on Greece signal a 60 percent probability of default in five years, while Spain and Italy survive the euro region’s deficit crisis.
Following Greece’s downgrade by Moody’s earlier this week, the division between peripheral nations widened and fueled speculation that the European Union will fail to agree on a comprehensive package to end the crisis, said Bloomberg.
Traders are betting Spain will avert an EU bailout as budget cuts and growth help repair its balance sheet.
Although Moody’s cut Spain’s credit rating on Thursday, the country’s growth trajectory “looks more reassuring than that of Greece and Portugal”, according to Moody’s analysts.
“We think that Portugal is likely to double-dip, while growth in Greece should remain in negative territory”, they added.
Investors note that Greece will inflict losses of about 50% on investors and extend bond maturities by 5-10 years in a series of moves to reduce its debt, according to Bloomberg.
