Concerns of a Greek Exit From Euro Area Returns; Spanish 10 yr Bond Yield Reaches New Record

Athens, Greece

On Monday the Troika which consists of the lenders from the European Commission, the European Central Bank, and the International Monetary Fund will arrive in Athens with fresh concerns that Greece will be unable to keep its financial commitments and deficit targets.

During the past 2 years, Greece has received €240 billion worth of rescue funds with attached strict austerity strings and deficit targets that have historically been missed by the Greek government.

Skepticism has grown among less indebted countries within the euro-area that they can keep Greece financially afloat.

One of the Troika members, the IMF, said last March that it won’t commit more money to Greece until late August at the earliest when its next disbursement period is reached and the Troika findings are completed, Bloomberg reported.

Greece is faced with having to come up with a debt level to GDP of 120% by 2020 while implementing reform measures, a debt level is difficult to achieve for the country. 

The Guardian reported last week that “Greek finance ministry officials say discussions on how Athens will meet the  magic target of €11.5bn in cuts will continue “right up until the troika returns next week’ “.

Spain

In early Monday morning trading Spain’s 10 yr. bond yield hit a eur0-area record of 7.55%, a level that is unsustainable over the long term for the Spanish government.

Spanish newspaper El Pais, reported on Saturday that Spain’s 17 semi-autonomous regions have debts of €140 billion of which €36 billion need to be refinanced this year.

 Officials from the region of Valencia announced on Friday it will apply for financial aid from a newly created government fund while it struggles to refinance their maturing debts.

Italy

Worries about the  financial stability of the euro area are pushing yields higher for the Italian 10 yr. bond which is currently at 6.42%.

 

 

 

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