NEW EURO FEARS ON BAIL-OUT OBLIGATIONS - There are fresh fears in Europe about the ability of Greece - and other peripheral euro zone countries - to repay their bail-out obligations. The repercussions of these exploded on the screens of bond traders with yields on Greek 10-year debt soaring to a record 13% yesterday. The Daily Telegraph this morning talked about fears that the euro zone crisis could enter a devastating new phase. The German Finance Minister, Wolfgang Schauble, said yesterday that Greece may default on its debt obligations. This raised the prospect that holders of Greek sovereign debt could lose money.
The head of fixed income research at Société Générale, Ciaran O'Hagan, explains that Mr Schauble said if the IMF/EU programme is not respected in Greece to the letter by June, steps could be taken. He says that Greece is introducing yet another austerity programme. He says that investors are worried that they won't get their money back on Greek debt. However, Mr O'Hagan says that Greece will meet the terms of the deal as it is still a relatively rich country. He says it is paradoxical that the countries currently experiencing so much debt troubles are all still relatively rich - including Ireland. He says, however, that the country's deficit ratio of GDP at over 10% is still much higher than that of Greece and Portugal.
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MORNING BRIEFS - Internet giant Google has reported a sharp rise in first-quarter earnings, the first figures with co-founder Larry Page back at the helm as boss. The world's leading search engine reported $6.54 billion in net revenue in the first quarter, up 29% from $5.06 billion the same time a year ago.Google has about a 65% share of the US search engine market and about 90% in Europe. The firm said it would continue 'to invest for the long term'.
*** Moody's Investors Service has today downgraded Ireland's currency government bond ratings by two notches to Baa3 from Baa1. The outlook on the ratings remains negative. Meanwhile, rival agency Fitch left its assessment of Ireland's creditworthiness unchanged after a review of the implications for the economy of last month's stress tests on the banks. Earlier this month, Fitch said it had placed Ireland's current BBB+ debt rating on what it calls 'credit watch negative', meaning a downgrade was likely. But it has now decided against a downgrade.
*** On the currency markets, the euro is worth $1.4470 and 88.59 pence sterling.
