James Hertling and Jennifer Ryan
European finance chiefs begin the final stage of hammering out a Greek rescue to prevent the euro area’s first sovereign default after the country was slapped with the world’s lowest credit rating by Standard & Poor’s.
Yields on 10-year Greek bonds climbed to 17.12 percent today, a record in the 17-nation euro-area’s history, before an emergency session of finance ministers in Brussels. They’re seeking to narrow differences on how investors share the cost of easing Europe’s biggest debt burden and to wrap up a new financing plan at a leaders’ summit on June 23-24, a year after Greece received a first bailout.
“The market is placing much too high a probability on this possibility that Greece will default imminently,” Peter Westaway, chief European economist at Nomura International Plc, said today on Bloomberg Television’s “First Look.” “Policy makers just aren’t going to let Greece default. It’s completely fanciful to think this is going to happen.”
S&P said yesterday the nation is “increasingly likely” to face a debt restructuring, reflecting political pressure on investors not to dump Greek holdings. The cost to insure Greek debt, the most expensive in the world, indicates a chance of about three in four that Greece will default in the next five years. The government today sold 1.6 billion euros ($2.3 billion) of 26-week treasury bills at a yield of 4.96 percent.
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