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Does the value of Irish debt fall in the event of a Greek default?

  • 20-06-2011 9:15pm
    #1
    SugarHigh
    Closed Accounts Posts: 3,265 ✭✭✭


    This was just mentioned by an analyst on BBC news that if Greece defaults the value of Portuguese and Irish debt would fall. Is this true and could someone explain it to me. Would Ireland actually benefit from a Greek default? If they did default would the E,U give us extra help to make sure the same doesn't happen us?


Comments

  • #2
    Icepick
    Registered Users, Registered Users 2 Posts: 2,456 ✭✭✭Icepick


    Nobody knows because it would depend on what would happen to the euro.


  • #3
    oppenheimer1
    Closed Accounts Posts: 6,084 ✭✭✭oppenheimer1


    SugarHigh wrote: »
    This was just mentioned by an analyst on BBC news that if Greece defaults the value of Portuguese and Irish debt would fall. Is this true and could someone explain it to me. Would Ireland actually benefit from a Greek default? If they did default would the E,U give us extra help to make sure the same doesn't happen us?

    I saw that report. From what I understand of what he meant is the value of Irish bonds on the secondary market would fall - which means yield would be rising. It means the market would think Ireland is more likely to default.

    It would only be good for Ireland if we had enough cash to go out into the market and buy back debt at a discount.


  • #4
    Nody
    Moderators, Category Moderators, Arts Moderators, Business & Finance Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 18,375 CMod ✭✭✭✭Nody


    SugarHigh wrote: »
    This was just mentioned by an analyst on BBC news that if Greece defaults the value of Portuguese and Irish debt would fall. Is this true and could someone explain it to me. Would Ireland actually benefit from a Greek default? If they did default would the E,U give us extra help to make sure the same doesn't happen us?
    Fall as in if it is currently valued at 80% (100 EUR debt is sold at 80 EUR on the market) it would fall down to lets say 60% (sold for 60 EUR on the market) due to fear that Ireland would also default in the future in some form. And no, once EU sees a default can be done with out fear they would cut of further payments rather then give more (as the fear is that a default would have disastrous consequences for banks/euro currency but if such things don't happen then they can let Ireland default, if it happens they need the cash in the first place to fix it with their banks anyway).


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