As markets expected the PSI results triggered a Credit Even and Greece has officially defaulted. The final number for the participants was of 83.7% for all Greek bonds. The split was 69% for Foreign Law bonds and 85.8% for Greek Law bonds. Here are more details about the credit event.
As the Greece saga is sort of over for now, let’s look at the situation in front of us. We all know that Greece is just one case of few in Europe. Now markets are turning their attention to the other countries in Europe, PII(G)S that might follow in the footsteps of Greece. For some the situation is really dire while for others there is some time.
As you will see all of those countries have in common:
-higher public debt as percentage of GDP from one year to the next
-dismal economic growth, some never recovering from the 2009 recession
-higher and higher unemployment.
The situation is not great and as the graph below shows it will get tougher for most of those countries to finance their increasing debt as EU is set to deliver -0.5% growth in 2012. In this environment I think there is big probability that we will see Greece again at the negotiation table but this time at least it will be joined by few others from the now infamous PIIGS group.