Tuesday Jul 29, 2014 Search
Weather | Athens
31o C
24o 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)  
Bourse benchmark drops below 1,200-point level again
Greek dairy company Fage wins yogurt case in Britain
More than 120,000 households to receive special benefit
Greece names fifth privatization agency chief in four years
MPs question whether ELSTAT chief should stay
Parliament’s institutions committee raised doubts on Tuesday about whether Andreas Georgiou should continue in his role as head of the Hellenic Statistical Authority (ELSTAT) after he critic...
Thessaloniki metro workers see more delays
The aim of getting Thessaloniki’s much-delayed metro up and running by 2016 is not attainable, representatives of workers who are constructing its tunnels and stations said on Tuesday. Haris...
Inside News
VOLLEYBALL
Volleyball national team second in European League
Much as the national volleyball team tried to repeat in the finals of the European League the feat it had achieved in the semifinals, it failed to overturn the advantage Montenegro had got f...
SOCCER
Ranieri says he has little to change in Greek national team
The Hellenic Football Federation (EPO) presented Claudio Ranieri as the new Greece coach for the next couple of years, after the Italian manager signed his contract in Athens on Friday. “I l...
Inside Sports
COMMENTARY
Through insecurity comes optimism
Prime Minister Antonis Samaras recently expressed his optimism regarding the quota of 180 Parliamentary deputies required for the election of Greece’s next president, in order for the countr...
EDITORIAL
Futile policy
The policy that Israel has been pursuing vis-a-vis the Palestinians is wrong and futile. Current tactics have failed to resolve the security issue and, at the same time, they are rapidly dra...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. MPs question whether ELSTAT chief should stay
2. Thessaloniki metro workers see more delays
3. Water company eases off debtors with under 3,000 euros outstanding
4. Central Macedonia police arrest Serb wanted in Croatia for war crimes
5. Thousands of TV viewers to lose analogue signal Friday
6. Hikers spot large fish kill at mouth of Spercheios River
more news
Today
This Week
1. Greece names fifth privatization agency chief in four years
2. Archaeological council bans international climbers' gathering at Meteora
3. Venizelos to meet Nimetz in Athens
4. World’s largest solar boat on Greek mission
5. Tsipras discusses Cyprus with Anastasiades in Athens
6. Municipal engineer dies in Thessaloniki following workplace accident
Today
This Week
1. Climber dies in Mount Olympus fall
2. Unequal after death
3. Greek sovereign debt at 174.1 percent of GDP in first quarter
4. Hedge fund Dromeus turns Greek tragedy to triumph with 160 pct gain
5. Quadriplegic woman on life support 'dies due to unpaid power bills'
6. Front-line threats
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.