June 14, 2011
European finance chiefs began the final stage of hammering out a Greek rescue to prevent the euro area’s first sovereign default after the country was slapped with the world’s lowest credit rating by Standard & Poor’s.
Yields on 10-year Greek bonds climbed to 17.46 percent today, a record in the 17-nation euro-area’s history, before an emergency session of finance ministers in Brussels. They’re seeking to narrow differences on how investors share the cost of easing Europe’s biggest debt burden and to wrap up a new financing plan at a leaders’ summit on June 23-24, a year after Greece received a first bailout.
Luxembourg’s Jean-Claude Juncker, who leads the group of euro-area finance ministers, said before the meeting that “all options” will be considered regarding Greece. Austrian Finance Minister Maria Fekter told reporters that members of the group still differ on a bailout model.
S&P said yesterday the nation is “increasingly likely” to face a debt restructuring, reflecting political pressure on investors not to dump Greek holdings. The cost to insure Greek debt, the most expensive in the world, indicates a chance of about three in four that Greece will default in the next five years. The government today sold 1.6 billion euros ($2.3 billion) of 26-week treasury bills at a yield of 4.96 percent.
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