Friday April 25, 2014 Search
Weather | Athens
21o C
15o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Bond price rally illustrates change of climate

By Sotiris Nikas

The yield on the Greek 10-year bond dropped to its lowest point in 30 months on Tuesday on the back of positive developments concerning Greece in the last few days.

Since last week, the Finance Ministry has embarked on a series of contacts with hedge funds and major foreign banks aimed at illustrating the work that has been done, along with the importance of recent eurozone decisions for Greece, the realistic character of the targets set for the near future and, above all, the governmentís determination to implement the streamlining program.

According to sources, besides talks with hedge funds, there have also been contacts with Morgan Stanley and Goldman Sachs. Morgan Stanley subsequently published an analysis on Monday mentioning that the Greek economy is entering a reorganization phase. A Goldman Sachs report is also expected in the coming days.

These positive developments have led to a mini-rally in the prices of Greek bonds, reducing both the yield and spread compared to the benchmark German bund. Since last Wednesday, foreign investors have proceeded to large purchases of Greek bonds, resulting in 10-year bond spread dropping by 134 basis points and yield by 1.214 percent, while the price has grown by 5.1 basis points.

The Greek bond rally was sparked by the announcement of the bond buyback program in early December. That led credit information specialist CMA, which calculates countriesí chances of defaulting on their debts, to leave Greece out of the list of countries examined in this quarterís report. That was not because the risk has been completely averted, but, as CMA analysts explain, because the rapid change of climate in the Greek bond market would not lead to a safe conclusion regarding the precise percentage in terms of the chances of a Greek default.

Nevertheless, the same analysts note that after the recent eurozone decisions to support Greece and the successful completion of the buyback program, fears of a Greek exit from the euro have diminished, which means that the possibility of a default is far smaller. Today, the country most likely to go bankrupt is Argentina (61.4 percent), followed by Cyprus (60.5 percent).

The positive news for Greece also includes Mondayís decision by the Eurogroup for the disbursement of a 92-billion-euro bailout tranche, which illustrates both that Greece is adhering to the program set out with its creditors and that the eurozone is now responding to its obligations without delay. Foreign banks and hedge funds have also discerned that Greece intends to proceed with its privatizations program even though there are still a number of problems.

As a result the yield on the 10-year bond dropped to 10.425 percent on Tuesday. The last time it was at such levels was on July 15, 2010, when it stood at 10.43 percent. On March 8, 2012 it had climbed as high as 39.85 percent Ė its peak. The spread with the German 10-year bund dropped on Tuesday to 883.8 basis points, registering a 280-month low. Its peak also came on March 8, 2012, when it amounted to 3,803.9 points. At the start of the crisis, on August 10, 2009, it had been at its minimum point of the last four years Ė 108.3 points.

Prices have climbed to 54.6 points and reached levels unseen since May 2011. Their lowest point was last June, at 13.483 points, as the uncertainty about the countryís place in the eurozone peaked.

ekathimerini.com , Tuesday Jan 22, 2013 (23:07)  
Ellaktor lands major Doha metro project
World seeks produce from Greece
Eurobank opens book for capital increase
Govít presents its growth model for the coming years
Work at new Athens cultural center gathering pace
It was revealed on Thursday that the outer shell of buildings at the Stavros Niarchos Foundation Cultural Center should be completed by July 28. The planting of trees and shrubs on the 17-he...
Greece makes request for debt relief as loan tranche approved
Greece made its first official request on Thursday for further debt relief as the Euro Working Group (EWG) met in Brussels to rubber-stamp the 2013 primary surplus and approve the release of...
Inside News
SOCCER
4,000 officers to police Greek Cup final
Police says it will ban mass gatherings in central Athens amid heavy security measures planned for Saturday's Greek Cup final between Panathinaikos and PAOK at the Olympic Stadium. More than...
BASKETBALL
Never underestimate the Greek hoopsters
Olympiakos and Panathinaikos, who between them have won the last three European crowns, won again at home on Wednesday to take their Euroleague play-off series with Real Madrid and CSKA Mosc...
Inside Sports
COMMENTARY
At the mercy of fools
The death of a young man at an Easter lunch in a village near Rethymno on Crete and the very serious injury of an American guest at a Resurrection ceremony on Santorini must not be forgotten...
COMMENTARY
Putting the party above the country
The case of Sabiha Suleiman, the Roma activist whose candidacy for the European Parliament was announced by SYRIZA only to be withdrawn shortly afterward, is an illustration of the leftist o...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
†RECENT NEWS
1. Ellaktor lands major Doha metro project
2. World seeks produce from Greece
3. Eurobank opens book for capital increase
4. Govít presents its growth model for the coming years
5. Work at new Athens cultural center gathering pace
6. Greece makes request for debt relief as loan tranche approved
more news
Today
This Week
1. Ellaktor lands major Doha metro project
2. Putting the party above the country
3. Three missing from cargo ship that went down off Crete
4. Central Athens cleanup a sign of Greece's turnaround
5. Strong card in debt talks
6. Samaras meeting with Dimon key to Greek return to bond markets
Today
This Week
1. Greece startup leaders say they canít break jobless cycle alone
2. Ground-breaking Good Friday mass signals thaw in Cyprus
3. Mayoral candidates clash over Athens mosque plans
4. Putting the party above the country
5. Government looks to kick on
6. Greece offers to help find Turkish F-16 lost in 1996
†††Find us ...
††... on
Twitter
†† ††... on Facebook ††
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.