“WSJ.com / Greece Highlights Bond-Market Fragility”

Since October 2009 the yield on the Greek 10-Year bond has risen from around 4.5% to nearly 6.5% on January 27, 2010. The bond market has continued to see Greek debt as riskier than it previously had following the global financial crisis. On January 12 a European Commission report condemned Greece for deliberately falsifying data. In the report the commission reported that Greek government deficit for 2008 was revised from 5.0% of GDP to 7.7% of GDP. In addition the forecasted 2009 GDP was to be changed from 3.7% of GDP to 12.5% of GDP. According to the report, these revisions were a result of, “the impact of the economic crisis, budgetary slippages in an electoral year and accounting decisions.” The unreliable data coupled with the continued expectation of high levels of debt has left investors with no choice but to demand higher yields for Greek sovereign debt.