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Friday, September 23, 2011

Morning Greece: Bank Downgrades, Default Rumor Denied, G20 Statement

by Calculated Risk on 9/23/2011 08:29:00 AM

Just another day ...

From the NY Times: With a Joint Statement, the Leading Economies Try to Reassure World Markets

The world’s major economies released an unexpected joint statement Thursday night ...

“We are committed to supporting growth, implementing credible fiscal consolidation plans, and ensuring strong sustainable growth,” said the communiqué from the Group of 20 nations. “This will require a collective and bold action plan with everyone doing their part.”
From the WSJ: Moody's Downgrades 8 Greek Banks
Moody's Investors Service Inc. downgraded eight Greek banks by two notches Friday, citing expected losses due to their holdings of Greek government bonds, increasing concerns about the impact of a recession as well as fragile liquidity and funding positions.

"The government faces significant solvency challenges and historical experience shows that small sovereign debt restructurings have often been followed by larger sovereign defaults," Moody's warned.
From Reuters: Greek default talk gathers pace
Greek Finance Minister Evangelos Venizelos was quoted by two newspapers as saying an orderly default with a 50 percent haircut for bondholders was one of three possible scenarios for resolving the heavily indebted euro zone nation's fiscal woes.
And the denial: Greece Denies Reports on Default Scenarios

Given the history of the European financial crisis, denials are frequently taken as confirmation ...

The Greek 2 year yield was up to 67%. The Greek 1 year yield is at 134%.

The Portuguese 2 year yield is up to 17.6% (rising quickly) and the Irish 2 year yield was down to 9.05%.