The odds of a Greek default climbed to 98% on Monday, fueled by speculation that Germany is strongly considering not providing Greece with further bailout funds.
According to Bloomberg, which cited data provider CMA, “it now costs a record $5.8 million upfront and $100,000 annually to insure $10 million of Greek debt for five years using credit-default swaps, up from $5.5 million in advance Sept. 9.” The default probability assumes a recovery rate of 40%, which means investors would receive 40% of the face value of their Greek bonds.
In a speech this past weekend, Greek Prime George Papandreou failed to reassure the international community that Greece can survive the European sovereign debt crisis. Papandndreou’s efforts were undermined by a report on Greece’s budget deficit that revealed it widened 22% in the first eight months of 2011.
Adding further fuel to the sovereign debt fire was a report from Moody’s in which it warned of possible downgrades for France’s three largest banks – BNP Paribas SA, Societe Generale SA and Credit Agricole SA. Moody’s put the three banks’ credit ratings on review in June to evaluate “the potential for inconsistency between the impact of a possible Greek default or restructuring and current rating levels.” Downgrades are likely as the review period concludes, according to people with knowledge of the matter, who spoke on conditions of anonymity.
The euro fell to a seven-month low against the U.S. dollar this morning, at 1.35, but pared its losses and traded near 1.3580 this afternoon.
Canaco Extends Gold Mineralization at Magambazi
* Hole 178 intercepted 9.3m of 11.6 grams per tonne (g/t) gold on the Magambazi Main zone.
* This intercept builds as a 70-metre depth extension of the previously reported intersection in hole 218, which graded 9.1m of 7.62 g/t of gold in the Magambazi Central zone.
