Bonds earn market attention
Greek paper increasingly seen as hot investment option by several international firms
Major international investment firms are now placing Greek bonds among the top investments for the next few months, thanks to the strong prospects of the Greek economy, their expected inclusion in the international indices, as well as the low issuance activity of the Greek state.
The yield on Greece’s 10-year bond has fallen to 3.78% from around 4.6% in January, while the spread has recorded its biggest narrowing in the eurozone this year, by more than 100 basis points, to 115 bp on Friday against 235 bp in January.
In addition, Greek bonds continue to have yields well below Italian bonds at all maturities, while they are only 15 bp above 10-year Spanish bonds and 58 bp from France’s 10-year paper.
Societe Generale advises investors to position themselves in Greek government bonds in 2024, highlighting Greece’s very good fiscal position, as well as the inflows expected to come when it joins international indexes.
The French bank is recommending positions in the Greek 10-year against the corresponding Italian ones, estimating that the Greece-Italy spread will reach -90 bp from about -60 bp today. It notes that the fiscal picture of Greece continues to improve, while the Greek state is expected to proceed with a moderate volume of issuance in 2024, compared to the huge amounts that other countries want to raise, such as Italy (330-350 billion euros), Germany (€280-295 billion) and France (€285 billion).
It estimates Fitch will give investment grade to Greece next Friday and this will lead to large inflows into Greek bonds, due to their inclusion in international indices. According to the French bank, Greece’s bond issuances in 2024 will range between €7-12 billion, while it expects the country to tap the markets with a 10-year and a 5-year bond, in January and March.
Goldman Sachs and JPMorgan also gave their “vote of confidence” in Greek bonds a few days ago. Goldman Sachs advised investors to position themselves in Greek bonds in 2024, describing them as “good quality” securities. For its part, JPMorgan emphasized last week that in its main positions for 2024 are the positions in Greek bonds against the Italian.
