Greece bond yields fall after ruling Conservatives win general election
Greece’s bond prices outperformed their peers on Monday as investors reckoned the outcome of general elections was unlikely to lead to a deviation from the current fiscal discipline.
Greece’s ruling New Democracy party (ND) took a commanding lead in a parliamentary election on Sunday but fell just short of the threshold needed to form a government on its own, making a runoff election in a month more likely.
ND will likely push for the July vote to achieve a one-party majority as a new election will leverage the new electoral system granting a seats’ bonus to larger parties.
Yields on Greece’s 10-year government bond fell 11 basis points (bps) to 3.948%. Bond yields move inversely with prices.
The gap between Greek and German 10-year yields tightened by 4 bps to 146 bps.
Analysts said that given the European financial support and the current low cost of debt, the Greek government could significantly reduce the debt-to-gross domestic product (GDP) ratio, which would be crucial for Greek debt to regain the long-awaited investment grade status.
Greece already achieved a primary balance in 2022, and the ECB hiking cycle is impacting the Greek economy to a lesser extent, they recalled.
[Reuters]
