ECONOMY

Ten-year yield falls below 10 pct as crisis concern subsidies

Greek bonds rose for a fifth-straight day on Friday, pushing 10-year borrowing costs to less than 10 percent, signaling an easing of financial-market tension in the country that triggered the euro-region’s sovereign debt crisis.

Yields on Greece’s benchmark 10-year bonds were headed for a close below 10 percent for the first time since October 2010. The securities have rallied, along with the debt of Spain, Italy and Ireland, since European Central Bank President Mario Draghi pledged in July to do “whatever it takes” to defend the euro. Adding to the gains are stimulus programs from central banks that may fuel demand for Europe’s higher yielding debt.

“Greek bonds have been major beneficiaries of the scramble for yield and the move towards global easing in the US, Japan and now finally in Europe,” Bill Blain, a strategist at Mint Partners Ltd. in London, said on Thursday. “Europe has come far indeed, and Greece has been dragged higher in its wake.”

Greece’s 10-year bond yield fell 34 basis points, or 0.34 percentage point, to 9.94 percent at 3.45 p.m. Greek time. The price of the 2 percent security due in February 2023 rose to 57.565 percent of face value.

The last time similar-maturity Greek bonds closed with yields below 10 percent was on October 26, 2010.

[Bloomberg]