New Greek Bonds could yield 20%


Yields on Greece's new bonds may climb to as high as 20% due to material risks stemming from implementation of terms for the biggest sovereign restructuring in history, according to Morgan Stanley (NYSE:MS).

Traders are offering to buy and sell the potential new bonds at yields on 11-yr securities of 22%, according to a person familiar with the prices.

Yields on exchanged Greek debt may be about 13 to 17% in the medium term as the Nation faces an election and seeks to comply with terms of its bailout and debt-reduction programs, New York-based Morgan Stanley said Thursday in a research report.

Private investors agreed to swap about 85% of their Greek government bonds for new securities, according to a banker briefed on the results.

The goal of the exchange is to reduce the 206-B Euros (US$$273-B) of privately held Greek debt by 53.5%.

Trading new Greek bonds in the gray market may be attractive to investors as they seek ways to hedge their holdings amid political debate and concern that credit-default swap insurance on the debt may not pay out. Stay tuned...

Paul A. Ebeling, Jnr. Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.