Endless Supply of Rabbits? Greece to Make April 9 IMF Repayment;

Townhall.com ^ | April 5, 2015 | Mike Shedlock

[Kaslin]

Greece to Make April 9 IMF Repayment

April 9th was one of the critical dates by which Greece was said to be out of cash. By now most expect these kinds of deadlines to come and go in belief the eurozone hat has an endless supply of rabbits.

Sure enough, Reuters reports Greece Says Ready to Make IMF Payment on April 9

Greece will repay a loan tranche to the IMF on time on April 9, its deputy finance minister said on Friday, seeking to quell fears of default after a flurry of contradictory statements on the issue in recent days.

Greece is fast running out of cash and its euro zone and International Monetary Fund lenders have frozen bailout aid until the new leftist-led government reaches agreement on a package of reforms.

That prompted the interior minister to suggest this week that Athens would prioritize wages and pensions over the roughly 450 million euro ($490 million) payment to the IMF, though the government denied that was its stance.

Euro zone officials then quoted Greece as saying it will run out of money on April 9, which the finance ministry denied.

"We strive to be able to pay our obligations on time," Dimitris Mardas told Greece's Skai TV. "We are ready to pay on April 9."

Adding to the confusion, German magazine Der Spiegel quoted a finance ministry general secretary, Nikos Theocharakis, as saying Greece would probably not pay next week's IMF tranche, prompting a further denial from the Greek finance ministry.

Bond Market Unimpressed

The bond market is unimpressed. Let's take a look at several durations.

Greece 10-Year Bond Yield

Greece 5-Year Bond Yield

Greece 2-Year Bond Yield


Notice the steep inversion in the yield curve. The 10-year yield is 11.91% while the 2-year yield is 23.57%.

This is a sign of default risk and the larger haircuts that shorter term durations will take vs. longer durations. Come in far enough and the bond prices are steep, but no longer inverted.

For example let's take a look at 3-month and six-month durations.

Greece 3-Month Bond Yield

Yield on the Greek 3-month bond is exceptionally high compared to the rest of the eurozone but at least it is not inverted compared to 10-year bonds.

However, the 3-month bond is inverted compared to the 6-month bond.

[Kaslin]

The rest of the title is Bond Market Unimpressed; Tsipras Heads to Russia

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[Cowgirl of Justice]

Glad I vacationed in Greece 10 years ago when it was still Greece.

[bgill]

[blueunicorn6]

Yeah, the President of Greece called me and he asked me to co-sign a loan for him.

I told him no way.

I did that with Spain and they flew to Vegas and lost it all at blackjack.