The Greek debt crisis continued to roil European debt markets on Wednesday after a leading rating agency cut the country's debt status to junk. While short term aid to Greece is a near certainty, economists warn that more international cash – and painful political steps in Athens – will be needed.
Azerbaijan, Colombia, Egypt, and... Greece. This week, the Hellenic Republic joined a rather unfortunate club of countries whose bonds are rated "junk" by Standard & Poor's, setting off a flight from Greek debt and emergency meetings across Europe to arrange a bailout.
The euro fell to a 12-month low against the dollar Wednesday. The risk premium to hold Spanish debt – the price investors demand over much safer German debt – rose to more than 1 percentage point. Investors are now demanding more than 11 percent return to hold Greek 10-year bonds, compared with a little more than 3 percent for the German 10-year, the European benchmark.
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