Greek bonds pricing default? 1-year 82%
- Thread starter the1
- Start date
M
morganist
No I know it is not right. I was just trying to give a polite response to say so.
Anyway bonds have changed. Now you have haircuts and repayment reductions. In other words you don't get what you were originally promised.
M
morganist
Remember the value has a negative correlation to the interest rate.
M
morganist
I have said it before. They just need another SDRM. Another way of doing it.
M
morganist
Quote from spanish89:
So if you buy Greek bonds the Greek government will repay you your money with 82% interest added ontop??
No. Bonds have a negative relationship between the interest rate and the value. The value is at 82%. The converse has happened to the interest rate in this scenario. Bonds have to be discounted in price due to the issuance of new bonds with different interest rates. The value of the bond will change dependent on this factor to fall in line with the return required by the market.
I don't know if I have explained that well. Does that make sense.
I'm waiting for a bitchy Martinghoul. NO.
What do you think Trefoil. Good enough brief explanation?
M
morganist
Unless the link meant yield and not value. In which case the opposite would be true. It would also be very confusing.
M
morganist
I hope you are being sarcastic.