MARKETS are pricing in another Greek default as trading in its brand new long-term bonds opened at a discount of over 75 per cent yesterday.
Athens announced that it has completed the largest debt restructuring in history yesterday as it swapped €177bn (£149bn) worth of bonds for a mix of new instruments including long-dated Greek-law debt and bonds issued by the Eurozone’s bailout fund.
The deal saw the value of bondholders’ investments written down by some 75 per cent, but the new long-term instruments they were given in return are faring little better.
Trading kicked off in the bonds with maturities ranging from 11 to 30 years. But investors are steering clear: secondary market yields are at 14 to 19 per cent, the highest in the Eurozone.
Cheviot Asset Management’s David Miller said: “Early indications show that the unofficial price of the ‘new’ Greek bonds will reflect the possibility of a second default. Markets largely discounted last week’s swap.”
As further evidence that more trouble is expected before long, the yield curve on Greece’s debt is still inverted: investors are demanding a higher yield on shorter-dated than longer-dated debt.