Monday May 4, 2015 Search
Weather | Athens
14o C
09o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Why Greece isn’t like U.S. revealed in bonds

The vulnerability of economies to sovereign debt crisis may depend on who’s holding their bonds.

That’s a signal from a new index designed by International Monetary Fund economists. It seeks to show which advanced economies have the flightiest sources of investment and so are most at risk of sudden capital outflows.

The gauge, published in a working paper this month, runs from zero to 100. A higher score means that the country is more prone to a sudden buyers’ strike from investors. A country with a zero rating would have all its debt held by the domestic central bank, while a 100 reading means all the country’s debt would be owned by foreign investors such as insurance companies and hedge funds, excluding governments and banks.

Created by IMF economists Serkan Arslanalp and Takahiro Tsuda, the index is based on a dataset from 24 major advanced economies and $42 trillion of sovereign debt holdings from 2004 to 2011.

The measure suggested the euro-area economies that received bailouts exhibited high risk of outflows as early as 2010. Greece was rated at 75 in the fourth quarter of 2009, when it could still borrow in the market. With results of 39 and 44 respectively at the end of 2011, Spain and Italy are less threatened because of the high share of debt in the hands of domestic banks, the report said.

With scores of less than 25 at the end of 2011, Australia, Japan, Switzerland and the U.S. were among those identified as having safer sources of finance. Germany scored 40 a year ago.

The index can explain some classic “puzzles” of why certain countries can sustain much higher debts without market pressure, said Arslanalp and Tsuda.

For example, while Japan has a debt equivalent to more than 200 percent of gross domestic product, a lot of it is held domestically and so is less at risk of flight, they said, while the U.K., Germany and U.S. may be in a similar class.

The study also found a rising share of foreign investors in sovereign debt markets even after $400 billion of withdrawals from the euro region’s most strained nations from mid-2010 to the end of 2011.

Banks are also increasingly exposed to their own government’s debt. Sixty-nine percent of euro-area bank’s regional debt holdings were of their own sovereign issues at the end of 2011, up from 57 percent at the end of 2007. In Greece, Italy and Spain, the ratio was closer to 100 percent.

The results “show that large funding gaps may arise in a number of countries in case of severe foreign outflows, requiring large absorption by domestic banks,” said Arslanalp and Tsuda.

[Bloomberg]

ekathimerini.com , Friday December 7, 2012 (14:55)  
Government too conscious of its image
Tenders add term for ‘other currency’
Bankers call for a quick deal to get economy back on track
Capital flight from banks, stocks, bonds
Two killed, around 20 wounded in clash between inmates
Two men were killed and at least 20 wounded in a violent clash between inmates at the Greek capital's Korydallos Prison on Sunday. According to initial reports, a group of inmates believed t...
Fugitive Xeros nabbed thanks to tip-off, paper trail suggests
Police recaptured November 17 terrorist Christodoulos Xeros in January after being tipped off by an informant, documents seen by Kathimerini suggest. According to the paper trail, a few days...
Inside News
SOCCER
Six teams to fight to avoid the last relegation spot
Panthrakikos was the biggest winner of the penultimate round of Super League games on Sunday through its victory at Veria, on the day that Olympiakos partied for its fifth consecutive title....
BASKETBALL
Olympiakos defeats Panathinaikos, Ivanovic goes
Olympiakos secured the top spot in the Basket League’s regular season through a 77-66 away win at Panathinaikos, sinking the Greens into all kinds of problems, including the sacking of its c...
Inside Sports
COMMENTARY
Wrong from the start
If the prime minister had handled negotiations with Greece’s international creditors differently from the onset I would bet that he would have achieved an excellent deal both for himself and...
EDITORIAL
Mixed signals
A decision from Greek Prime Minister Alexis Tsipras is long overdue. Caught up in the internal contradictions and disagreements of his leftist SYRIZA party, Tsipras has been unable to make a...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Six teams to fight to avoid the last relegation spot
2. Olympiakos defeats Panathinaikos, Ivanovic goes
3. Two killed, around 20 wounded in clash between inmates
4. Government too conscious of its image
5. Tenders add term for ‘other currency’
6. Bankers call for a quick deal to get economy back on track
more news
Today
This Week
1. Athens hopes for breakthrough
2. If SYRIZA misses targets it must go, says Lafazanis
3. Wrong from the start
4. Fugitive Xeros nabbed thanks to tip-off, paper trail suggests
5. Tenders add term for ‘other currency’
6. Mixed signals
Today
This Week
1. The Good, the Bad and the Ugly
2. Greece’s day of reckoning inches closer as debt payments loom
3. Greek decision to exit euro would be disastrous for Greece
4. Greece’s decade-long relationship with Merkel
5. Varoufakis attacked by anarchists while dining in Athens
6. No need to widen the rift
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2015, H KAΘHMEPINH All Rights Reserved.