Finance News

Debt crisis may hurt banks outside Greece

Credit ratings agency Moody's Investor Service said the banking systems in Portugal, Italy, Spain, Ireland and Britain could all be hurt by a widening debt crisis.

With Spain seeing its borrowing costs jump in its latest bond issue — a clear sign of market fear, since investors demand higher rates from borrowers they see as riskier — Europe remained delicately poised at a juncture.

Moody's said much depended on bailout loans agreed for Greece, and whether that was seen as decisive in keeping that country away from bankruptcy. Greece faces a May 19 repayment date and the loan money is expected to get there after approval by national parliaments, but its longer term prospects are less certain.

"A key factor determining whether contagion risk continues in this case will be the market's view of the likely success or otherwise of the recently agreed International Monetary Fund and European Union support package for Greece," Moody's said.

That bailout offers the debt-ridden country €110 billion ($142 billion) in loans over three years from the IMF and the other 15 countries that use the euro.

Source: Associated Press
Date: 06.05.2010 [ID: 247]

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