Athens bonds at all-time low as bailout appears doomed
The price of short-dated Greek bonds fell to an all-time low at one point today and France's BNP Paribas became the first major bank to take a 60% haircut on its exposure to Greek debt in two clear signs that the latest bailout package is set to fail.
The yield on two-year bonds due in August 2103 bearing a 4% coupon almost unbelievably rose above 100%. The price of the bonds, which analysts said was far more important now than the nominal yield, dropped to 31.2% of their face value.
ING analyst Alessandro Giansanti said this showed investors were no longer expecting to get back even the 50% of their investment as had been agreed at last week's eurozone summit. BNP described last week's Greek bailout plan as "shrouded by uncertainty" as it said it had written down 60% of all the country's sovereign debt on its books.
The extra-harsh haircut cost BNP €2.1 billion (£1.8 billion) in its third quarter and pushed its post-tax profits down by 72% to €541 million.
"The new Greek debt restructuring plan has adversely impacted this quarter's net income, which otherwise is in line with the performances of previous quarters," said chief executive Baudouin Prot.
