April 14, 2011
The cost of insuring Greek debt has hit a record high on renewed fears the country will default on its borrowings. But support came from the head of the IMF, who insisted the embattled country would "make it".
Dominique Strauss-Kahn said Greece would be able to meet its debt obligations and pay down its debt if it received more support from the EU, a veiled warning to Germany and France that they must show greater leniency towards the struggling Athens government. "I understand how painful it is for the Greek people but I think Greece will make it," he said.
Data released by Markit showed the cost of insuring Greek debt for five years, using a credit default swap, had risen above 1,100 basis points for the first time.
This means it would cost €1.1m (£970,000) to insure €10m of Greek debt, compared with £55,000 to insure £10m of UK debt.
The yield, or effective interest rate, on Greek bonds also rose sharply after the German finance minister, Wolfgang Schäuble, suggested "further measures" may be needed to bring Greece's finances under control. Sterling rose against the euro as investors dumped the single currency.
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