Courtesy of Deutsche Bank’s fixed income team, a reminder of the extent to which risk is being priced into Greek government debt, as measured by the spread between Hellenic Republic bonds and German bunds:
And the extent to which it, err, isn’t for other European countries:
The lack of contagion, some might say, gives the European Commission some breathing space to force Greece to sort-of sort-itself-out. Here’s Deutsche Bank’s Soniya Sadeesh and Abhishek Singhania:
That the widening has not yet escalated into a wider systemic move for Eurozone spreads, in our view, enables the EC to maintain the pressure on Greece to “help itself”.
The suggestion being that if that were to change — if countries with significant Greek-exposure began significantly feeling the effects of the Hellenic Republic’s own problems — Greece would very suddenly become a European-wide problem, with the potential for loans, bail-outs, etc.
Lucky then that today’s sale of Greek bonds, seen as a key gauge of demand for the country’s debt, looks to have gone down reasonably well.
Related links:
Sprεαding… – FT Alphaville
Grεεk dεbt disastεr – FT Alphaville
Where’s the Greek CEE contagion? – FT Alphaville
Consulting the Greek CDS oracle – FT Alphaville