In Brief
Greek bond premium rises to 945 points, its highest since May LONDON (Reuters) – The premium that investors demand to purchase Greek government bonds rather than German benchmark Bunds rose yesterday to the highest level since May 10, when an EU-IMF rescue package for Greece was announced. Worries about the peripheral sector grew after Ireland’s one notch downgrade to AA minus by Standard & Poor’s late on Tuesday. Traders said very thin conditions on the Greek debt market probably exaggerated the move. The Greek/German 10-year government bond yield spread widened about 35 basis points on the day to 945 bps – its highest since May 10 – as the 10-year Greek yield jumped 27 bps yesterday to 11.6 percent. Czechs will not take part in EU bailout of Greece, says premier The Czech government will not participate in a program to help Greece with its economic problems, Prime Minister Petr Necas told the Austrian newspaper Kurier in an interview, without providing further details. The Czechs remain «responsible» members of the European Union, believe in budget «discipline» and are in favor of expansion, Necas said in the interview. Necas described himself as a «Euro realist» and said his country had lost «prestige» when its government collapsed during its presidency of the EU in 2009. Kurier reported. (Bloomberg) Hungary and the IMF Hungary said it will not seek a new loan from the International Monetary Fund when talks resume later this year because it doesn’t need one. «There has been no need thus far and there won’t be a need in the future for a new loan agreement,» the Economy Ministry said yesterday in an e-mailed statement, adding that its position hasn’t changed. «The planned talks in the autumn don’t have a goal of reaching a new loan agreement.» The statement clarified earlier comments that had fed investor optimism about improved relations between the IMF and Hungarian government. The ministry said yesterday it would probably reach an agreement with the IMF, without specifying whether it would seek a new loan after Hungary’s 25-billion-euro ($32 billion) bailout expires in October. (Bloomberg) Irish rating Standard & Poor’s on Tuesday cut its ratings on Ireland and assigned the country a negative outlook, saying it expects Ireland to face substantially higher costs to support its ailing financial institutions. S&P cut Ireland’s long-term rating one step to AA minus, the fourth-highest investment grade. A negative outlook indicates another downgrade is more likely over the next one to two years. «The projected fiscal cost to the Irish government of supporting the Irish financial sector has increased significantly above our prior estimates,» S&P said in a statement. S&P said it now expects Ireland will need to spend 90 billion euros to support its banking system, up from its prior estimates of 80 billion euros, including capital used to improve the solvency of financial institutions and losses from loans the government acquired from banks. (Reuters)
