Most global investors predict at least one nation will leave the euro area within five years and that Greece and Ireland will default, according to a poll conducted by the Bloomberg news agency.
The Bloomberg Global Poll, which coincided with the start of the World Economic Forum?s annual meeting in Davos, Switzerland, on Wednesday, found that 59 percent of respondents think one or more of the 17 euro nations will quit by 2016, including 11 percent who see an exit within 12 months. Respondents were divided over whether Portugal would default, while a majority expressed confidence in Spain.
Portugal?s 10-year bond fell on Wednesday, pushing the yield up 9 basis points to 6.83 percent, 391 basis points more than on the comparable German bond. Spanish bond yields climbed 2 basis points to 5.34 percent, while the yield on Greece?s 10-year bond gained 4 basis points to 11.38 percent.
?What?s happening in the eurozone is one of the biggest risks to the global economy,? said New York University Professor Nouriel Roubini at the World Economic Forum?s opening session.
Respondents in the poll completed this week of 1,000 investors, analysts and traders who are Bloomberg customers were almost evenly divided about whether the euro area will eventually break apart. Most of the 45 percent who anticipated a breakdown said it wouldn?t occur in the next five years; 48 percent said it would never happen.
?It?s very difficult to imagine a scenario in which the euro would break up,? said Kenneth Broux, a senior market economist at Lloyds TSB Corporate Markets in London and another of those surveyed. ?The political investment in the project is way too high and Europe?s debt market is now the biggest in the world.?
The Greek government denied this week that it?s studying ways to restructure debt but almost three-quarters of Bloomberg poll respondents said the country ultimately would likely default; 53 percent said Ireland would also probably do so.