Intra EU intrest rate spreads

[AJJ]

Hi,

With regard to the differences in interest rate between German and Greek goverment bonds I have a question:

As both countries have the same currency and they are both part of the EU.
What risk would I run... if I would go short the German Government bond and use the money to go long the Greek government bond and gain the interest rate differences of both countries?

Thanks Alexander.

 

[fibonelli]

I'd be delighted to take the other side of your trade!

 

[readyaimfire]

Hi,

With regard to the differences in interest rate between German and Greek goverment bonds I have a question:

As both countries have the same currency and they are both part of the EU.
What risk would I run... if I would go short the German Government bond and use the money to go long the Greek government bond and gain the interest rate differences of both countries?

Thanks Alexander.

Here's an article from the FT with a little history:

FT.com / Columnists / John Authers - Greeks bearing gifts