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Greece's debt drama deepens after downgrade

Greece's debt drama deepens after downgrade
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There has been a nervous reaction across markets amid growing concerns Greece will default on its debt and Standard and Poor’s downgrading.

The yield on Greece’s 10-year bonds rose a percentage point to 13%, while Greek three-year bond yields leapt more than than 3.5% to about 27%.

Concerns over Greece’s future are contagious economist Napolean Maravegias told euronews.

“Does it makes me worry? Obviously, I do worry and not just as an economist but I think every Greek citizen worries. Every setback to striking a deal with our lenders makes things more difficult if the market is “drying up”.”

Greece is due to pay the International Monetary Fund around 1-billion euros next month and concerns over its ability are spreading on the streets.

Trader Takis Zamanis said: “It shows that the markets think that we are on the verge of bankruptcy. This is the prevailing opinion of the market, over the last few weeks and we can see that with high interest rates and the way transactions are made.”

Our Greek business correspondent Symela Touchtidou believes the downgrade decision suggests some see a default as increasingly likely.

“It was just a year ago that Greece tried to make a first comeback on the markets. Back then investors welcomed it with a certain confidence and relatively low interest rates. After the new downgrade that era looks now very distant,” says Touchtidou.

Standard and Poor’s decision to downgrade Greece has renewed talk of a “Grexit” from the euro zone but some believe the country can weather the storm if it worsens.

Florist Takis Giannopoulos said: “In any case we are already out of the markets. Right? This is a fact. Whether u downgrade us or not it is the same. So I do not care at all. They try to terrify people. We have already gone bankrupt, almost every month.”

Failure to agree a plan with creditors will mean that Greece will default, a development that could also force the government to limits money transfers.