Friday May 29, 2015 Search
Weather | Athens
14o C
09o 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 government’s 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 countries’ chances of defaulting on their debts, to leave Greece out of the list of countries examined in this quarter’s 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 Monday’s 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 – 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 – 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 country’s place in the eurozone peaked.

ekathimerini.com , Tuesday Jan 22, 2013 (23:07)  
Schaueble plays down positive reports from Athens
Greek bank deposits fall to lowest in more than a decade
Next Greek aid program isn’t on table yet, says Moscovici
Hoteliers seek VAT solutions
Civil aviation union cancels action on minister’s pledge
The Federation of Civil Aviation Authority Unions (OSYPA) called off Friday a 48-hour strike that was due to take place Saturday and Monday. The decision to cancel the planned action was tak...
4.2-magnitude quake strikes off Crete
An undersea quake, measuring 4.2 on the Richter scale, occurred in the area between Crete and Kassos in the early hours of Friday but no damage or injuries were reported. The quake followed ...
Inside News
SOCCER
Panathinaikos conquers PAOK through Tavlaridis goal
A Stathis Tavlaridis goal has brought Panathinaikos to practically within one point from clinching a spot in next season’s Champions League qualifiers, as the Greens made it three out of thr...
SOCCER
AEK Athens returns to top league after financial collapse
Greek club AEK Athens has just returned to the country's top soccer league, two years after financial collapse sent it to a lower league. One of the country's largest clubs, AEK sealed its s...
Inside Sports
INTERVIEW
The eurozone’s ‘ambiguous’ architecture
“That’s not something you’re supposed to say in public, right?” In his humble way, Thomas Sargent, Nobel Prize winner in Economics, tries to avoid the question posed to him by Kathimerini re...
COMMENTARY
Only Greece can end its miserable ´Groundhog Day´
In the film "Groundhog Day," Bill Murray is condemned to relive the same 24 hours on an endless loop. The happy ending (he gets the girl) only comes when he changes his destiny by becoming a...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Civil aviation union cancels action on minister’s pledge
2. 4.2-magnitude quake strikes off Crete
3. Traffic accidents down in March
4. Four questioned for trying to sell ancient statuette
5. Bill squeezing private schools to be debated
6. Greece mixes messages on expectations for deal
more news
Today
This Week
1. Greece creditors say no deal near as G-7 frustration vented
2. Only Greece can end its miserable 'Groundhog Day'
3. Next Greek aid program isn’t on table yet, says Moscovici
4. 12 Russians injured in lightning strike at ruins on Crete
5. Some blame EU Commission for Greek obstinacy in debt talks
6. The eurozone’s ‘ambiguous’ architecture
Today
This Week
1. Hotel contracts with a ‘Greek default clause’
2. Some 300 mln left banks on Tuesday
3. Neither Grexit nor a dual currency will solve Greece’s problems
4. No more 'quick and dirty' fixes for Greece
5. Romantic notions meet reality
6. Tsipras faces down radicals within SYRIZA over terms of deal
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2015, H KAΘHMEPINH All Rights Reserved.