Greek bond yields jump on fears of German referendums
Greek bond yields jumped on Tuesday on concerns that a proposal for German parties to hold nationwide referendums for major European decisions may complicate Athens’s efforts to overcome its debt crisis.
Such decisions include Germany committing money at the European Union level and powers transferred from Berlin to Brussels and could affect Berlin’s ability to act swiftly in a crisis, making aid-reliant members like Greece more vulnerable.
“Anything which would slow the aid mechanism would be enough to… trigger some repricing of these bonds,” said Commerzbank rate strategist David Schnautz.
Greek 10-year bond yields rose 43 basis points to 8.58 percent, having fallen as low as 7.94 percent at the start of November – their lowest since Greece’s debt restructuring in March 2012.
Other Greek bond yields also rose.
The proposal looked likely to be quashed by Chancellor Angela Merkel, but traders said investors still sold Greek bonds on the back of it, if only to book profits on the recent rally.