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Schaeuble Raises Restructuring

Greek and Portuguese bonds led a slump in the securities of Europe’s most indebted nations amid mounting investor concern that some may be forced to restructure their debts.
The declines pushed the yields on Greek and Portuguese 10- year bonds to euro-era records after German Finance Minister Wolfgang Schaeuble said that Greece may need to renegotiate its debt burden if an audit in June questions its ability to pay creditors. Standard & Poor’s head of European sovereign ratings, Moritz Kraemer, said the risk of such an event has risen. Greek two-year yields climbed the most since January 27.
“Schaeuble’s comments bring the prospect of restructuring back onto the table,” said Peter Chatwell, a fixed-income strategist at Credit Agricole Corporate & Investment Bank in London. “It gives the market plenty of time to fret. If we have to wait until June, there’s the prospect of event risk in the future, which leaves the market open to speculation and spread- widening.”

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