MW: Euro slides to another five-month low versus dollar
Investors ignore Greece's budget reassurances
By William L. Watts, MarketWatch
LONDON (MarketWatch) -- Greece has a credibility problem.
Concerns about the nation's ability to meet its borrowing needs on its own, along with a fresh warning about Portugal's budget situation, stoked investor fears of a sovereign debt crisis within the euro zone Thursday, helping to push the hard-hit single currency to another five-month low versus the U.S. dollar and denting the value of Greek stocks and bonds. See related Europe Markets.
Greek Finance Minister George Papaconstantinou denied a report in the European Voice newspaper that European Union officials are examining the possibility of a "heavily conditioned" loan that would keep Greece from turning to the International Monetary Fund for aid.
The report is "not valid," Papaconstantinou said at a conference in Athens, according to Bloomberg News.
"We are not expecting anyone to come to our rescue," he said, adding that Greece will be able to meet its borrowing needs on schedule this year.
Meanwhile, a Greek finance ministry official on Thursday said Greece plans to sell $1.5 billion to $2 billion worth of global bonds to investors in Asia and the United States, The Wall Street Journal reported.
Spyros Papanicolau, director-general of the Public Debt Management Agency said Papaconstantinou would lead an investor roadshow late next month that will include stops in Beijing, Shanghai, Tokyo, New York and probably Singapore.
The sharp rise in Greek government bond yields, however, will further complicate Greece's funding woes, adding to questions about the government's ability to meet borrowing needs, said Jane Foley, research director at Forex.com.
Ten-year Greek government bond yields soared Thursday, sending the spread versus the comparable German bund to 3.09 percentage points, traders said, the highest since the launch of the euro in 1999. The cost of insuring Greek government debt against default has also continued to soar.
Shares in Greek lenders including EFG Eurobank Ergasias and Emporiki Bank of Greece also dropped sharply in Athens.
And fears of a debt crisis have contributed to significant pressure on the euro (CUR_EURUSD 1.41, 0.00, -0.19%) , which changed hands at $1.4038 versus the dollar after sinking to another five-month low against the greenback Thursday. The single currency had traded above $1.50 as recently as early December, before concerns about Greece hit the radar screen.
Weaker-than-expected purchasing managers data and reduced investor risk appetite also contributed to the euro's slide, analysts said. Read Currencies.
