Interview Question for Ifra

2nd interview question

Read the following two articles and answer the questions.

Bank, Sovereign Bond Risk Surge to Records as European Debt Crisis Deepen The cost of insuring against default on European sovereign and financial debt surged to records on concern the region‟s debt crisis is worsening. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments rose 18 basis points to 328 at 5 p.m. in London. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers soared 24 basis points to 270, according to JPMorgan Chase & Co. Both gauges are at all- time highs based on closing prices. An election loss for German Chancellor Angela Merkel‟s party and reports of a rift between Greece and the International Monetary Fund fueled concern that support for bailing out indebted nations is waning. A senior IMF economist forecast a “hard default” for Greece by March, the Wall Street Journal said, as officials suspended a budget review and Italy backtracked on its austerity pledges. “There‟s a lot of uncertainty with respect to the implementation and outcome of any austerity plans and bailout measures,” said Markus Ernst, a credit strategist at UniCredit SpA in Munich. Support from the IMF, European Union and European Central Bank is key to Greece receiving a sixth payment of loans under a 110 billion-euro ($156 billion) bailout approved in May 2010. The country‟s finance minister said Greece‟s deepening recession will probably scuttle its 2011 deficit targets and mean no growth next year, but denied that talks with the so-called troika had collapsed. Greek Swaps Credit-default swaps on Greece soared 182 basis points to 2,532, according to CMA. Contracts on Italy jumped 44 basis points to a record 446.5, Portugal climbed 46 to 1,026 and Spain rose 28 to 420, while Germany increased 5 to 84 and France was up 14.5 at an all-time high of 186. Italian yields resumed their ascent as Prime Minister Silvio Berlusconi bowed to...