UPDATE: From FT Alphaville: "Who’s exposed to Greece? (II)"
First up, Bloomberg:
Holders of Greek bonds may lose as much as 200 billion euros ($265 billion) should the government default, according to Standard & Poor’s.
The ratings firm yesterday cut Greece three steps to BB+, or below investment grade, and said bondholders may recover only 30 percent to 50 percent of their investments if the nation fails to make debt payments. Europe’s most-indebted country relative to the size of its economy has about 296 billion euros of bonds outstanding, according to data compiled by Bloomberg.
The downgrade to junk status led investors to dump Greece’s bonds, driving yields on two-year notes above 25 percent today from 4.6 percent a month ago as concern deepened the nation will delay or reduce debt payments. Prime Minister George Papandreou is grappling with a budget deficit of almost 14 percent of gross domestic product.
“It’s now not just market sentiment, but a top rating agency sees Greek paper as junk,” said Padhraic Garvey, head of investment-grade strategy at ING Groep NV in Amsterdam.
The yield on Greece’s 4.3 percent security due March 2012 surged 531 basis points, or 5.31 percentage points, to 24.3 percent as of 10:50 a.m. in London, after earlier climbing to a record 25.38 percent. Before yesterday, Greece’s bonds had lost about 17 percent this year, according to Bloomberg/EFFAS indexes. Yields move inversely to bond prices....MORE
And from FT Alphaville:
(H/T Marc Ostwald, Monument Securities).