137%. That’s what you can get – in theory – if you buy Greek one-year bonds. The price of these securities has now plunged below the coupon, ie the interest payment you’re supposed to be receiving.
It’s rubbish, of course. You just don’t get 137% yields. The market is saying Greek one-year debt isn’t worth the paper it’s written on.
Source: Bloomberg
Look at this scary chart. It shows how, as the country’s financial woes have multiplied, the yield on its one-year debt has soared from just 1% less than two years ago to today’s figure.
In short, bondholders aren’t going to get anything at all. And the yield surge is a sure sign that whatever some politicians may be saying, Greece is clearly going to default on at least part of its debts.
How might this all play out? You can read the full story here: How a Greek default could hammer global markets and here: Don’t bet on China saving the eurozone.
Category: Market updates