Monday April 27, 2015 Search
Weather | Athens
14o C
09o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Foreigners’ appetite for Greek bonds is growing

By Ilias Bellos

Major foreign investment funds’ interest in buying Euro periphery state debt remains insatiable, keeping the prices of Greek sovereign bonds near their recent historic highs. There has been a small decline over the last few sessions, but market experts note that this development is natural after the rally sparked by the European Central Bank’s decision to adopt unconventional measures to relax its monetary policy.

“Greek bonds, just like the Spanish and the Portuguese, are absorbing their major gains from the recent period. However if there are any favorable catalysts from the flow of Greek macroeconomics, they may register new highs,” said a market professional.

So why are foreign funds even opting to seek out Greek treasury bills?

The answer is to be found in the negative interest rates that the ECB now charges on deposits. Hence even the 1.8 percent yield that the recent auctioning of 13-week T-bills ended up at in June proved to be particularly attractive. The Public Debt Management Agency drew 1.3 billion euros from the market, the amount was covered 2.99 times and some 3 billion euros was offered by Greek and foreign investors. At the six-month T-bill auction a week earlier another 1.625 billion euros was drawn with the yield dropping to 2.15 percent from 2.7 percent at the May sale, with offers exceeding 3.3 billion euros.

Last week the yield on the 10-year benchmark ranged between 5.9 and 6 percent, from 5.6 percent after the announcement of the ECB decision, and that of the five-year bonds issued in April ranged between 4.1-4.2 percent against an original coupon of 4.75 percent.

The general decline in the cost of borrowing for the Greek state constitutes a springboard for when the government decides to proceed with its plans to issue new bonds, possibly seven-or three-year debt. These two products, which are missing from the basket of Greek paper, are seen as necessary for reference issues and to put the Greek debt yield curve back on a normal course.

Foreigners continue to discern capital value in Greek bonds: Bank of America Merrill Lynch notes that, according to its data, the Greek bond yield spread against that of the German benchmark bund is at its lowest point since 2010. Commerzbank recommends an increase in positions on the periphery of Europe. Nicolo Piotti, managing director at Morgan Stanley Investment Management, told investors at a recent event in Athens that his firm currently has a preference for Europe and particularly the sovereign bonds of the periphery.

The great demand for bonds, which brings their yields down, is also based on their stubbornly high returns – at a time when central banks’ interest rates are in effect prohibitive for investments – and not so much on the fundamentals of the real economy; even more so in Greece’s case.

Nevertheless if the macroeconomic data confirm the assessments regarding a recovery and at the same time there appears to be a favorable conclusion (or even satisfactory progress) on the horizon regarding the negotiations with Greece’s eurozone partners about restructuring Greek national debt, then a fresh and even bigger rally cannot be ruled out.

ekathimerini.com , Monday June 30, 2014 (22:09)  
EU Commission to revise down Greek growth forecast
Further delays will only harm economy
Cosco eyes big network from Piraeus port
Fresh cuts to bank collateral may lead to capital controls
Akinci elected Turkish-Cypriot leader, raising hopes of peace deal on island
Mustafa Akinci, who won a run-off for the Turkish Cypriot leadership on Sunday, is a veteran politician seen as best placed to revive peace talks with the Republic of Cyprus. Akinci, 67, bea...
Merkel, Tsipras agree to stay in touch to reach debt deal
Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel agreed in a phone conversation on Sunday to maintain contact during talks between Athens and its lenders to reach a de...
Inside News
SOCCER
Panathinaikos beats Xanthi to rise to second
Panathinaikos jumped back up to the second spot of the Super League after its home win over Xanthi on Saturday, as PAOK slumped to third due to its draw at home with PAS Giannina on Sunday. ...
WATER POLO
Olympiakos wins Euro crown in women´s water polo
The women’s water polo team of Olympiakos won its first ever LEN Euro League at the Final Four it hosted in Piraeus by beating holder Sabadell from Spain 10-9 in Saturday’s final. After defe...
Inside Sports
ANALYSIS
If Greece falls, no one wants their prints on the murder weapon
«We're going bust.» «No, you're not.» «You're strangling us.» «No we're not.» «You owe us for World War Two.» «We gave already." The game of chicken between Greece and its international cred...
COMMENTARY
Reaching crunch time
Several cabinet ministers and MPs are no longer hiding it: They either openly admit that they are promoting the drachma or they murmur things like, “Why not the drachma?” Some go even furthe...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Akinci elected Turkish-Cypriot leader, raising hopes of peace deal on island
2. Panathinaikos beats Xanthi to rise to second
3. EU Commission to revise down Greek growth forecast
4. Further delays will only harm economy
5. Cosco eyes big network from Piraeus port
6. Fresh cuts to bank collateral may lead to capital controls
more news
Today
This Week
1. Greek tourism threatened by various factors
2. Agenda
3. Fresh cuts to bank collateral may lead to capital controls
4. Merkel, Tsipras agree to stay in touch to reach debt deal
5. Further delays will only harm economy
6. EU Commission to revise down Greek growth forecast
Today
This Week
1. Greek government's popularity takes a hit as talks drag on
2. Europe's collision course with Greece
3. It's up to the Greek government to ensure deal with lenders, says ECB's Coeure
4. Leaving the past in the past
5. Denialism
6. The price of compromise
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2015, H KAΘHMEPINH All Rights Reserved.