Greece Default Risk Is ‘Substantial,’ Pimco’s Bosomworth Says

September 06, 2010, 6:58 AM EDT
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e-mail this story print this story diggadd to Business Exchange By
Josiane Kremer

Sept. 6 (Bloomberg) -- Greece still faces a “substantial� default risk
as insolvency prevents the nation from repaying its debt when its
bailout program expires in three years, Pacific Investment Management
Co. fund manager Andrew Bosomworth said.

“Greece is insolvent,� Bosomworth, Munich-based head of portfolio
management at Pimco, which oversees the world’s largest bond fund, said
in a telephone interview today. “I see it as being quite a substantial
risk that Greece eventually defaults or restructures.�

In a best-case scenario, Greece’s government debt will swell to 150
percent of gross domestic product, Bosomworth said. The European
Union-led rescue package assumes the Athens-based government will tap
investors for 82 billion euros ($106 billion) during the life of the
bailout program, “and that’s I think going to be very difficult,� he said.

“Debt servicing as a share of government revenue will increase
substantially, particularly if current yield levels do not decline,�
Bosomworth said.

The extra yield that investors demand to hold Greek 10-year bonds over
German equivalents is now 902 basis points, compared with 785 basis
points at the end of June. Greek 10-year debt yielded 11.24 percent
today. The Spanish spread is at 173 basis points, Portugal’s is at 331
basis points and Ireland’s is at 340 basis points.

Greek Yields

The premiums investors charge to hold Spanish and Irish debt over German
bunds are wider than before the EU announced its rescue package on May 10.

If the interest rates of other southern European countries “stay where
they are, they are going to have some problems as well,� Bosomworth
said. “You have the contagion risk and until we know precisely how this
contagion risk will be contained, it is a pretty risky strategy staying
in the other countries as well.�

The euro slumped 21 percent from a November 2009 peak through a June
trough this year as the threat of contagion from Greece’s financial
crisis prompted investors to sell other euro- region assets. The country
ran up a budget deficit of 13.6 percent of GDP last year on debt of
115.1 percent of total output, the European Commission estimated in May.
Greece’s debt will swell to 124.9 percent this year, the commission said.

--Editors: Tasneem Brogger, Craig Stirling

To contact the reporter on this story: Josiane Kremer in Oslo at
Jkremer4@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at
tbrogger@bloomberg.net

E chi se ne frega comprare e basta.


"LoZioBart®___________" <cacchi_miei@punto.it> ha scritto nel messaggio
newsIJho.94289$Ua.21444@twister2.libero.it...
> Greece Default Risk Is 'Substantial,' Pimco's Bosomworth Says
>
> September 06, 2010, 6:58 AM EDT
> More From Businessweek
>
> Greek-German Spread at 800 Basis Points First Time Since June
> BOJ Should Abolish Its Bond Purchase Limit, DPJ's Okubo Says
> Polish Inflation Rate Rises Past Central Bank Target (Update1)
> Ping An President Predicts 'Stable' Profit in 2010 (Update1)
> Papandreou Changes Greek Cabinet Amid Growth Slump
> Story Tools
> e-mail this story print this story diggadd to Business Exchange By Josiane
> Kremer
>
> Sept. 6 (Bloomberg) -- Greece still faces a "substantial" default risk as
> insolvency prevents the nation from repaying its debt when its bailout
> program expires in three years, Pacific Investment Management Co. fund
> manager Andrew Bosomworth said.
>
> "Greece is insolvent," Bosomworth, Munich-based head of portfolio
> management at Pimco, which oversees the world's largest bond fund, said in
> a telephone interview today. "I see it as being quite a substantial risk
> that Greece eventually defaults or restructures."
>
> In a best-case scenario, Greece's government debt will swell to 150
> percent of gross domestic product, Bosomworth said. The European Union-led
> rescue package assumes the Athens-based government will tap investors for
> 82 billion euros ($106 billion) during the life of the bailout program,
> "and that's I think going to be very difficult," he said.
>
> "Debt servicing as a share of government revenue will increase
> substantially, particularly if current yield levels do not decline,"
> Bosomworth said.
>
> The extra yield that investors demand to hold Greek 10-year bonds over
> German equivalents is now 902 basis points, compared with 785 basis points
> at the end of June. Greek 10-year debt yielded 11.24 percent today. The
> Spanish spread is at 173 basis points, Portugal's is at 331 basis points
> and Ireland's is at 340 basis points.
>
> Greek Yields
>
> The premiums investors charge to hold Spanish and Irish debt over German
> bunds are wider than before the EU announced its rescue package on May 10.
>
> If the interest rates of other southern European countries "stay where
> they are, they are going to have some problems as well," Bosomworth said.
> "You have the contagion risk and until we know precisely how this
> contagion risk will be contained, it is a pretty risky strategy staying in
> the other countries as well."
>
> The euro slumped 21 percent from a November 2009 peak through a June
> trough this year as the threat of contagion from Greece's financial crisis
> prompted investors to sell other euro- region assets. The country ran up a
> budget deficit of 13.6 percent of GDP last year on debt of 115.1 percent
> of total output, the European Commission estimated in May. Greece's debt
> will swell to 124.9 percent this year, the commission said.
>
> --Editors: Tasneem Brogger, Craig Stirling
>
> To contact the reporter on this story: Josiane Kremer in Oslo at
> Jkremer4@bloomberg.net
>
> To contact the editor responsible for this story: Tasneem Brogger at
> tbrogger@bloomberg.net

LoZioBart® wrote:

> Greece Default Risk Is 'Substantial,' Pimco's Bosomworth Says

che fai come il bony?
che il giorno 25 agosto scrisse che aveva paura della grecia ed invece
quello fu il minimo di agosto.
Adesso è rimasto con un palmo di naso