Initial optimism on Greek bailout may falter
Greece on Friday officially asked for financial assistance from the IMF and European Union (EU). Markets reacted with some relief, with spreads of Greek Government Bonds vs Bunds tightening by about 100 basis points for the two-year bonds and about 50 basis points for the ten-year bonds.
The Greek government had so far indicated that it hoped to be able to finance itself on the market, with potential IMF/EU aid as a confidence-boosting safety net. Markets clearly regarded this as unrealistic.
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