GREEK TWO-YEAR notes slid for a seventh day and the 10-year yield premium to German bunds widened to the most since the euro’s debut after the nation’s finance minister failed to dispel concern that the government is doing enough to avoid a default.

The decline drove the yield on the two-year note up as much as 210 basis points, bringing increases since the streak began to 447 basis points. The 10-year Greek yield rose 54 basis points, bringing its premium to 442 basis points above bunds, the benchmark for borrowing in Europe.

Greek stocks fell and credit-default swaps on the nation’s debt rose to a record. Finance minister George Papaconstantinou said there would be no need for additional measures after the European Union and International Monetary Fund put together a rescue plan last month.

Greek bonds pared their declines as European Central Bank president Jean-Claude Trichet, who kept the main interest rate unchanged at 1 per cent yesterday, said a debt default was “not an issue” for Greece, although he said austerity plans must be implemented “rigorously”.

Mr Papaconstantinou said on Greek television that it would take some time for spreads to narrow and there would be no need for extra measures to shore up the nation’s finances as long as Greece’s stability pact was implemented “correctly”.

The spread, or extra yield, investors demand to hold Greek 10-year securities reached the most since the euro’s introduction for a third day. It averaged about 65 basis points in the five years through November before concern deepened that the country’s deficit would swell. – (Bloomberg)