•  
• Tweet
•  
•        Print
•  
•         Track Keywords
•  
• 

Benedicte Gravrand, Opalesque Geneva:

We live in a sea of sovereign debt, fears of which are creating storms in the financial markets. Only yesterday, Standard & Poor’s cut its outlook on U.S. sovereign debt for the first time from "stable" to "negative". The FTSE All World index then went down 2.1% and the S&P 500 slumped 1.9%. Meanwhile, yields on Greece’s three-year bonds surged to more than 20%, up more than 1 percentage point on the day and nearly triple their October levels, said the FT. This was largely due to reports that various German officials had accepted that a Greek bailout was a question of when rather than if.

Today, asset managers are weighing the potential consequences of ballooning debt the U.S. and the Eurozone. In both cases, governments struggle with debt issued in currencies they do not control – sovereign debt being government bonds issued in foreign currencies. This eliminates devaluation as a solution and raises the possibility of potential restructuring.

According to a recent study called "States and Sovereigns: Eurozone and U.S. State Debt Woes," authored by Roubini Global Economics (RGE) and sponsored by prime broker ......................

To view our full article Click here