Greek yields drop to 4-year low, stocks rally amid troika talks
Greece’s bonds jumped, sending yields to a four-year low, and stocks climbed on speculation the nation will reach and agreement with international creditors to ensure its bank-recapitalization requirements are manageable.
Greece’s 30-year yields dropped below 7 percent for the first time since April 2010 as Greek central bank Governor George Provopoulos meets with officials from the European Commission, International Monetary Fund and European Central Bank in Athens on Wednesday. Stocks also rallied after Greek state natural gas company Depa SA and Russia’s Gazprom OAO reached an agreement on prices for gas supplied to Greece.
“We see equities reacting to the four-year low in Greek government bond yields and on speculation that the recapitalization needs of Greek banks are manageable,” said Thanassis Drogossis, head of equities at Athens-based Pantelakis Securities SA. “Also, the reported deal between Greece and Gazprom for the reduction in natural gas supply prices is good news for the Greek manufacturing sector.”
Greece’s assets are winning fans more than four years after the nations’s debts sparked a financial crisis in the euro area that left the nation requiring two bailouts to rescue it from insolvency. A European Commission report on Tuesday forecast that the Greek economy would expand in 2014 after six years of contraction.
Ten-year bond yields fell 16 basis points, or 0.16 percentage point, to 7.19 percent at 12:03 p.m. London time, the lowest since May 2010. The 30-year yield was at 7.01 percent after dropping as much as 18 basis points to 6.92 percent.
Greece’s ASE Index rallied 2.6 percent, taking its two-day gain to 6.2 percent, the most since May. The gauge has jumped 11 percent this year, exceeding the 2.8 percent increase for the Stoxx Europe 600 Index. Greek stocks have posted the third- biggest gain of all 24 developed markets tracked by Bloomberg in 2014, trailing only Denmark and Ireland.
The nation is in a standoff with the Troika of international lenders over the extent of nation’s bank capitalization requirements, the Financial Times reported Feb. 24. The IMF may publish a figure of 20 billion euros if Greece sticks to an estimate of 6 billion euros, the report said.
[Bloomberg]
