Just three weeks away from a potential default, Greece faced unrelenting financial market pressure on Tuesday as investors waited to see whether a promised eurozone and IMF bailout package would reach Athens in time, AP reported. A key indicator _ the interest rate gap, or spread, between Greek and benchmark German 10-year bonds trading on financial markets _ hit a new 12-year high of 6.80 percentage points. That means Greece would pay a crippling interest rate of about 10 percent, tantamount to financial suicide, if it seeks to raise funds through issuing bonds. It looks even worse on the two-year bond issue, where the yield spiked up another 1 percentage point to 14.85 percent, following Monday's massive 3 percentage point spike. Bond yields rise as their price falls. Greek company shares plunged for a fifth straight session Tuesday, with the benchmark Athens stock index shedding 6.75 percent to reach 1,683.08 points in late afternoon trading. The message from the markets is clear _ there are real doubts that Athens will be able to service its debts. «The market is pricing in the realistic prospect that Greece may not be in a position to meet all its debt obligations,» said Jane Foley, research director at Forex.com. Default would hurt the shared euro currency and could lead to the debt crisis spreading to other countries with shaky finances such as Portugal and Spain, threatening them with the same vicious spiral of default fears leading to higher rates. Athens needs a first batch of money from the rescue to come through by mid-May, as it has ¤8.5 billion of a 10-year bond maturing on May 19 and no way of paying unassisted. But it faces a long, nail-biting wait with far from guaranteed results. «Until that day, everything must be concluded,» Finance Minister George Papaconstantinou said. «I have absolutely no doubt that we will get there.» Prime Minister George Papandreou said his country stood «naked before international market storms.» «We are going through Greece's hardest time in recent decades,» Papandreou told his Socialist party lawmakers. «The challenges our country faces are unprecedented, not only for Greece, but also for Europe and even the world economy. ... And what I say is no exaggeration.» Germany _ the single largest contributor to a ¤45 billion joint eurozone rescue with the International Monetary Fund _ is demanding agreement on more strict conditions for the release of the funds ahead of a May 9 election in North Rhine-Westphalia. -- SPA
