Greek bonds and stocks have been in international isolation since June, when the first 7.5 billion euros of the tranche of 10.3 billion got disbursed. Foreign investors are ignoring Greek securities due to the persisting uncertainty over the prospects of the country’s economy.
A report by Bloomberg on Thursday noted that Greek bonds, excluded from the European Central Bank President Mario Draghi’s quantitative easing program, “have been stuck at the bottom of the wave that’s lifted debt markets across the euro area.”
An official at a bank’s dealing room told Kathimerini that “foreign investors have no interest in the Greek bonds. We are unable to find buyers even for 5 million euros in Greek paper, let alone hit the markets with an issue of some billions of euros. In the secondary market the spread between the offered sale prices and the market of the Greek bonds amounts to 200 basis points. This means there is no interest and no transactions are performed.”
“Greek bonds have been in no-man’s land since June,” Patrick Esteruelas, head of research at Emso Asset Management, which oversees $3.2 billion, told Bloomberg. “As long as people feel that the government is going to move extremely slowly at best, or backslide at worst, they will have doubts about the solidity of its bailout backstop,” he added.
At the moment the yield of the Greek paper is comparable to that of countries such as Ukraine, Turkey, South Africa and Mongolia. Benchmark 10-year yields closed on Thursday at 8.15 percent, meaning the cost of borrowing is almost three times as high as that of Portugal’s, that stood at 2.94 percent. Even Cyprus’s 10-year bond yield was less than half of Greece’s, at 3.59 percent.
The picture is even worse at the Athens Exchange: Its negative performance this year (down 10.48 percent since the start of the year) ranks among the worst internationally. The decline of the daily trading volume to around 20-30 million euros reflects the complete absence of interest by foreigners in the local market, with the record low being the 13.31 million euros of trading posted on August 17.