Yields on Greek 10-year bonds soared to 12.8 per cent in late morning, after reports suggested the International Monetary Fund (IMF) has rejected informal requests to delay loan repayments.
Yields on its three-year notes rose to 26.43 per cent, after the FT reported this morning that the IMF had “persuaded” the Greek government not to make an official request to delay its repayments. Greece is due to make two separate repayments totalling €1bn (£718m) in May.
The news comes as the situation begins to look increasingly parlous for the country: last night German finance minister Wolfgang Schaeuble warned the country that another restructuring of its debts was unlikely, while demands for war repatriations from Germany were “completely unrealistic”.
In an interview with Bloomberg TV last night, he said the country’s plight was “completely down to Greece”, adding that although restructuring might be possible “in 10 years”… “today the issue for Greece is reforming its economy in such a way that it becomes competitive at some point”.
Schaeuble’s comments came shortly after credit ratings agency Standard & Poor’s cut its long-term credit rating to CCC+, indicating its creditors are at risk of it defaulting.
Athens is still in the process of negotiations to unlock a €7.2bn tranche of cash from its lenders, but faces objections from EU and IMF chiefs over the way its new government, led by Syriza’s Alexis Tsipras, has approached reforms.
“Conditions have worsened due to the uncertainty stemming form the prolonged negotiations between the almost three-month-old Greek government and its official creditors,” said S&P in a statement yesterday.
Connor Campbell, a financial analyst at Spreadex, suggested the negotiations were “finally reaching some sort of crescendo”.
What is concerning is how quickly these ‘informal’ talks could turn into serious delays and missed payments as Greece rapidly runs out of money.”
The news pushed European markets down, with the FTSE 100 falling 0.31 per cent to 7,074 points in late morning trading.