Greece government bond markets face a sharp sell-off today in a thin market, and there is contagion to Portugal, Ireland, Spain and partly Italy. Over the Weekend Greece saw support from EU and IMF (and US). However, the German stance is still a market theme. Yesterday, the German Finance Minister, Wolfgang Schäuble, said Germany hasn't made a decision yet on aid for Greece.
Overall we think it is unlikely that the EUR 8.5bn roll-over on 19 May will be a problem, however comments from German officials adds to uncertainty. We judge that the consequences of a Greek sovereign debt default would be very serious, and for that reason we expect that EU and IMF will do whatever it takes to avoid a default of Greek debt. German Chancellor, Angela Merkel, speaks at CEST: 15.00 on Greece.
Greece Bonds markets fails to stabilise
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