Thursday August 21, 2014 Search
Weather | Athens
29o C
23o 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)  
Greek stocks post rise of 0.99 percent
Banks reject stress test concerns
Greek energy minister requests gas back-up
Greece an alternative route for South Stream, report suggests
Botched steroid deal led to Mani murders
A deal to sell steroids gone wrong appears to have been the reason for the murder of two bodybuilding fanatics, aged 25 and 26, whose bodies were found on Tuesday in a ravine on the outskirt...
Public works near completion, minister says
Eight public works projects, including the completion of a new stretch of highway at the notorious Maliakos Gulf in central Greece, are due to be completed by the end of the year Infrastruct...
Inside News
SOCCER
Greek soccer officials in refereeing probe to face prosecutor on Sept 15
Eleven soccer officials were on Wednesday given until September 15 before they have to face prosecutor Aristidis Koreas, who is investigating allegations that the draws to decide which match...
ATHLETICS
Long jumper Tsatoumas takes Greece´s second silver at European Championships
Greece won its second medal at the European Athletics Championships in Zurich, Switzerland, on Sunday with Louis Tsatoumas coming second in the long jump. Briton Greg Rutherford won the even...
Inside Sports
COMMENTARY
Logged out of reality
It is a global phenomenon, and we have yet to fully grasp its implications for democracy and the functionality of Western states. The Internet is a bottomless well of information and a vast ...
EDITORIAL
Manipulated institutions
Greece’s leftist opposition must not manipulate an institution as important as the President of the Republic for the sake of political ends. Regrettably, SYRIZA leader Alexis Tsipras appears...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Botched steroid deal led to Mani murders
2. Greek stocks post rise of 0.99 percent
3. Banks reject stress test concerns
4. Greek energy minister requests gas back-up
5. Greece an alternative route for South Stream, report suggests
6. Public works near completion, minister says
more news
Today
This Week
1. Greek current account surplus widens in June
2. Two missing men found shot dead near Kalamata
3. Logged out of reality
4. Greek firms see 30 pct rise in PayPal payments from abroad in 2014
5. ECB in policy limbo, boxed in by its own plans
6. Greece to give children at primary school road safety lessons
Today
This Week
1. Carved sphinxes at Ancient Amphipolis tomb will not be removed
2. Canada’s fiscal adjustment has lessons for Greece
3. Treating Amphipolis with care
4. Greece to offer law on restructuring bad loans next month
5. Greece’s recession eases as country nears end to six-year slump
6. Ministry sys ‘no’ to debt collection agencies
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.