Greek Bonds Approach Pakistan Levels on DEBT CONCERN! PLEASE Pay Attention Folks To What Is Happening To The European Nation Economies. Our Government Has Been Following In Their Foot Steps!!!

Bloomberg Market News

Greek Bonds Approach Pakistan Levels on Debt Concern

written by Keith Campbell and Ben Levisohn

Friday April 23, 2010

April 23 (Bloomberg) -- Greece’s deficit crisis is pushing its bond yields closer to those of Pakistan, a junk-rated nation that is battling the Taliban.

Two-year Greek note yields soared to more than 11 percent after Moody’s Investors Service cut the nation’s credit rating yesterday and the European Union said the country’s budget deficit was worse than previously forecast. Similar-maturity securities from Pakistan, which turned to the International Monetary Fund for a bailout in 2008, yield 12.2 percent.

Greece’s Prime Minister George Papandreou has failed to convince investors he can push through the austerity measures needed to shore up the nation’s finances amid deepening protests at home. The government is prepared to ask euro-area members for a bridge loan to repay debt next month as it works out terms of a 45 billion-euro ($60 billion) aid package with the EU and IMF, a Greek official said yesterday.

“Greece is like an old-fashioned emerging market dependent on IMF help,” said William Nemerever, co-manager in Boston of the $1.9 billion GMO Emerging Country fund and a partner at Grantham, Mayo, Van Otterloo & Co. in Boston. It compares unfavorably to traditional emerging markets that are now in “good fundamental shape,” he said. “It’s kind of in limbo, a reflection of the uncertainty and the disappointing fundamentals in the country that will require some assistance for years.”

Debt Ratings

Greek government bonds lost more than 13 percent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Pakistan debt gained more than 16 percent, according to Bank of America Merrill Lynch’s USD Emerging Market Sovereigns, Pakistan index.

The debt of Pakistan, South Asia’s second-biggest economy, is rated B3 by Moody’s, six levels below investment grade. Greece’s ranking was lowered one step to A3 yesterday by the company, four levels above junk. Moody’s put a negative outlook on the bonds, indicating it’s more likely to cut the classification again than raise it or leave it unchanged.

“The market is evaluating Greece as a single B credit,” said David Rolley, who helps oversee $106 billion as co-head of global fixed-income in Boston for Loomis Sayles & Co. “There is a very large policy uncertainty that will have to be sorted out before normal liquidity conditions resume.” Rolley declined to comment on his holdings.

The yield on the Greek two-year note dropped 50 basis points to 10.13 percent as of 10:15 a.m. in London, bringing the increase this week to 323 basis points, or 3.23 percentage points. The Pakistan note yielded 12.2 percent.

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