The spread between the Greek benchmark 10-year bond and the German bund has dropped to its lowest point since October 2010, at 834 basis points, vindicating bondholders who chose not to take part in the buyback program late last year.
Greek bonds have experienced a steady increase in their price since December as investment interest in them among foreign funds continues unabated. This is attributed to expectations for an improvement in the prospects of the Greek economy and the dissipation of the threat of a eurozone exit.
Although the reduction of the cost of borrowing for the country remains in the air given that Greece is not likely to hit the markets any time soon, access to bond markets is becoming easier and cheaper for Greek enterprises, as the recent case of OTE telecom showed.
Greek debt in the secondary market bears the price of about 56 cents per euro at the moment, more than four times higher than the low registered, last May at 13.61 cents. Most of this 425 percent increase was recorded after the buyback.
This does not only benefit those who chose to abstain from the buyback, but also the local social security funds that retain state bonds in their portfolios.