Could Greece default on its sovereign debt?
Amid concerns that the European debt markets are still struggling with liquidity issues and problems regarding specific economies such as Greece, Spain, Italy and Portugal there are fears that we could see an EU member state default on sovereign debt in the short term. Those who believe there will be a default are pointing the finger Greece despite the fact that the country has received a massive financial bailout package from the European Union and the International Monetary Fund. So could Greece still default on its sovereign debt?
This is an issue which is dominating the European debt markets and last week's downgrade of Spanish sovereign debt from its goldplated Triple-A rating did cause ripples through market. There is no doubt that despite the fact the European economy as a whole has pulled clear of the recession there are still many underlying financial difficulties to be overcome in the short to medium term. Whether or not we actually see a default by a country such as Greece remains to be seen but the issue is dominating the financial markets at the moment.
A number of loan programs introduced by the likes of the Bank of England and the ECB will come to an end over the next 12 months at which point many banking institutions, and traditional companies, will be forced to refinance their debts. This is when we could see the next potential credit crunch!
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