Saturday September 20, 2014 Search
Weather | Athens
27o C
19o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Greek yields near post-restructuring lows as lenders set to return

By Marius Zaharia

LONDON - Greek bond yields on Tuesday hovered around their lowest levels since the country's debt restructuring as its international lenders said they will return to Athens this week to assess the delivery of economic reforms.

The lenders interrupted a visit last year due to a lack of progress in discussions with Greek authorities. Since then, Greece has shown significant improvement.

Its budget surplus for 2013 beat forecasts and its economy shrank less than the government or its lenders expected - achievements which should lead to the disbursement of a tranche held up since September, analysts said.

Greek 10-year yields dipped slightly to 7.56 percent, trading less than 10 basis points above their lowest levels since a March 2012 debt restructuring hit last week.

"It does appear that the economy is recovering from a very, very deep slump. We've seen a recovery in government finances as well ... so you could expect a positive (troika) review," said Elwin de Groot, market economist at Rabobank in Utrecht.

A spike in trading volumes and a tentative resurgence of debt insurance instruments represented further signs of healing in a market once at the mercy of so-called vulture funds reputed for seeking high returns in collapsed assets.

Volumes in the first five weeks of the year stood at about 546 million euros, about 36 percent of the turnover for the whole of 2013 and almost matching 2012's annual volume, Greek central bank data showed.

That indicated Greek bonds appealed to a broader group of investors than just domestic banks and high-risk hedge funds while volatile trading during this year's emerging market tensions suggested investors with mandates in the developing world were now holding some Greek bonds as well.

This year has also seen the re-appearance of prices of Greek credit default swaps, last quoted at roughly 490 basis points, although data provider Markit said CDS prices for the moment were just indicative. The market effectively collapsed after Greece restructured its debt.

Once CDS trading picks up, investors will be able to hedge their exposure to Greek bonds and may be more willing to hold them.

"It's all related to investors regaining interest in trading (Greek) bonds," ING rate strategist Alessandro Giansanti said.

Warning signs

There remained warning signs, however. Greek 10-year yields continued to trade above the 30-year ones - which usually occurs in distressed debt markets where investors price in a high risk of default.

This suggests that while investors have grown more optimistic on Greece's chances to rebound from one of the biggest debt defaults in history, they still fear that an accident could be just around the corner.

The ruling coalition in Greece has a narrow three-seat majority in Parliament and a collapse might pave the way for anti-bailout party SYRIZA to come to power.

Analysts warn any more brinkmanship between Athens and its lenders might be a catalyst for further erosion within the coalition, especially with European Parliament elections looming.

International lenders currently rule out another debt restructuring in Greece, but analysts say all bets are off if Syriza come to power, with even the country's future in the euro zone in doubt.

"Investors still worry about another debt restructuring," ING's Giansanti said.

Using a model which compares bond prices with where they would be if they paid similar coupons to low risk German Bunds, he estimates the market sees a roughly one in three chance of default. [Reuters]

ekathimerini.com , Tuesday February 18, 2014 (11:56)  
Record sum of new debts to the state in August
‘Greece can meet its needs on its own’
Cyprus civil servants´ strike called off
Elliniko investors eye Cyprus project warily
Mayors resisting evaluation to face disciplinary action
Mayors and municipal employees who refuse to take part in a civil service evaluation scheme the government has undertaken as part of commitments to international creditors will face discipli...
Fyssas rally demonstrators face prosecutor after clashes
Sixty-four people arrested in Keratsini, a suburb of Piraeus, on Thursday, following clashes with police during an anti-racist march marking the one-year anniversary of the murder of rapper ...
Inside News
SOCCER
Triumph for PAOK, historic result for Asteras in Europa League
Greek teams produced a patchy record on the opening night of the Europa League group stage on Thursday, as PAOK thrashed Dynamo Minsk, Asteras Tripolis snatched a draw at Besiktas and Panath...
SOCCER
Financial crisis forces Greek second division postponement
Greece's second soccer division Football League announced on Wednesday the postponement of the start of the season due to financial difficulties being faced by most clubs. "The board of dire...
Inside Sports
COMMENTARY
High stakes after the Scottish vote
We will soon know whether the Scots voted for their country’s independence or whether they will remain citizens of the “United Kingdom of Great Britain and Northern Ireland.” What was alread...
EDITORIAL
Breathing room
Even Greece’s biggest critics find it hard to deny that the debt-hit country has achieved an unprecedented fiscal turnaround within a very short period of time. Sure, progress in promoting t...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Record sum of new debts to the state in August
2. ‘Greece can meet its needs on its own’
3. Mayors resisting evaluation to face disciplinary action
4. Fyssas rally demonstrators face prosecutor after clashes
5. PM in energy talks ahead of crucial meeting with Merkel
6. Attiki Odos Lamia exit to close Sunday
more news
Today
This Week
1. ‘Greece can meet its needs on its own’
2. Record sum of new debts to the state in August
3. Hardouvelis signals Greece may skip IMF loans to exit aid curbs
4. EIB signs deals with Greece for 815-mln investment in infrastructure projects
5. Dozens of arrests at march to mark anniversary of Fyssas murder
6. Syntagma metro station to close for Fyssas tribute concert
Today
This Week
1. Greece on standby
2. Greece at bottom of social justice scale among EU28
3. Central Athens traffic restrictions back in force on Monday
4. Lost in the fog
5. Democracy under Pressure | Live Streaming
6. SYRIZA spokesman suggests gov't sought to stop NERIT airing Tsipras speech live
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.