Saturday August 30, 2014 Search
Weather | Athens
31o C
24o 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)  
Disappearing inflation heightens Draghi concerns
Ministry launches work experience program for unemployed graduates
Tax burden in Greece among EUs heaviest, study reveals
Coalition bent on protecting weaker groups
New Democracy aims to ease tax burden, attack SYRIZAs policies as leaders Thessaloniki speeches near
New Democracy is to follow a two-pronged strategy in the coming days as it attempts to win over voters by pledging to tend to their tax concerns while also mounting a campaign to discredit S...
Infrastructure Minister assures officials over coastal revamp
A radical overhaul of the southern Athens coast at Faliro Bay will be put to tender in December, Infrastructure Minister Michalis Chrysochoidis said Friday at a meeting with officials from t...
Inside News
SOCCER
Tough draw for Greek sides in Europe League Greek stage
Following Thursday nights high, when all three Greek teams competing in the Europa League made it into the group stage of the competition, a harsh reality struck Friday as they found out wh...
JUDO
Greek judoka Iliadis triples up as Aguiar stuns Tcheumeo
Greek star Ilias Iliadis claimed his third world title in the under-90kg category in Chelyabinsk on Friday as Brazilian Mayra Aguiar and Colombian Yuri Alvear won gold in the womens under-7...
Inside Sports
COMMENTARY
Keeping an eye on international developments
The Ukrainian crisis may herald the start of a second Cold War, while there is no shortage of analysts comparing the current international climate to that of 1914 in the runup to World War I...
EDITORIAL
A few good men
It gives us a great deal of hope that we have a new batch of mayors and regional authorities, as well as university rectors who represent the voice of reason and prudence and are unafraid to...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
RECENT NEWS
1. Disappearing inflation heightens Draghi concerns
2. Ministry launches work experience program for unemployed graduates
3. Tax burden in Greece among EUs heaviest, study reveals
4. New Democracy aims to ease tax burden, attack SYRIZAs policies as leaders Thessaloniki speeches near
5. Coalition bent on protecting weaker groups
6. Infrastructure Minister assures officials over coastal revamp
more news
Today
This Week
1. Keeping an eye on international developments
2. Disappearing inflation heightens Draghi concerns
3. A few good men
4. Strong undersea quake occurs off island of Milos, felt in Athens
5. Greek quest for debt relief faces hurdles in Paris
6. Dozens of migrants intercepted in the Aegean
Today
This Week
1. Attack on gay couple in Athens leaves one man needing surgery
2. Purification rituals
3. The battle against progress
4. Thessaloniki mayor Boutaris sworn in wearing yellow star amid Golden Dawn protests
5. Athens finalizes Paris talks goals
6. Strong undersea quake occurs off island of Milos, felt in Athens
Find us ...
... on
Twitter
... on Facebook
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright 2014, H KAΘHMEPINH All Rights Reserved.