Bets Grow That a Greek Default is Imminent
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Price: $240.27 +0.23%
Overall Analyst Rating:
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Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1.6%
Revenue Growth %: +1.2%
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Chances that Greece will default on its debt in the next five-years has ripped over the weekend, now at a 98 percent probability.
According to data compiled by CMA, of the CME Group (NYSE: CME), it costs a record $5.8 million upfront, and $100,000 annually to insure $10 million of Greek debt over the next five-years using credit-default swaps (CDSs).
Investors weren't reassured over the weekend when Greece's budget gap widened 22 percent for the year-through-August, undermining Prime Minister George Papandreou's promise to adhere to deficit targets put on by the European Union (EU) and International Monetary Fund (IMF) when it took bailout funds.
According to Bloomberg, the default probability is based on a standard pricing model that assumes investors will be able to recover 40 percent of bonds' face value in the event of default.
Following the data, Greece now sees its economy shrinking 5 percent in 2011, beyond the 3.8 percent that was forecast by the European Commission.
The damage isn't limited to Greece, however, with CDSs on Portugal, Italy, and France surging higher. CDSs on Portugal rose 79 basis points to 1213, Italy moved 40 basis points higher to 503, and France ticked 11 points to 189.
According to data compiled by CMA, of the CME Group (NYSE: CME), it costs a record $5.8 million upfront, and $100,000 annually to insure $10 million of Greek debt over the next five-years using credit-default swaps (CDSs).
Investors weren't reassured over the weekend when Greece's budget gap widened 22 percent for the year-through-August, undermining Prime Minister George Papandreou's promise to adhere to deficit targets put on by the European Union (EU) and International Monetary Fund (IMF) when it took bailout funds.
According to Bloomberg, the default probability is based on a standard pricing model that assumes investors will be able to recover 40 percent of bonds' face value in the event of default.
Following the data, Greece now sees its economy shrinking 5 percent in 2011, beyond the 3.8 percent that was forecast by the European Commission.
The damage isn't limited to Greece, however, with CDSs on Portugal, Italy, and France surging higher. CDSs on Portugal rose 79 basis points to 1213, Italy moved 40 basis points higher to 503, and France ticked 11 points to 189.
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