Greek yields fell sharply on Tuesday after Athens and international lenders struck a deal to unlock the next tranche of emergency loans following protracted negotiations.
The deal comes after seven months of talks between Greece and its lenders – the European Commission, the European Central Bank and the International Monetary Fund – on reforms Athens must implement to get the next cash installment.
Greek Finance Minister Yannis Stournaras confirmed an earlier Reuters report that a deal to unblock the next bailout funds had been reached.
“It’s (bailout deal) another catalyst in the overall picture and adds to sentiment which has been very positive since the start of the year,” said Michael Leister, a strategist at Commerzbank.
“All these bits and pieces fit together and reflect the overall sense that investors are hunting for yield and are probably comfortable dipping their toes back into the Greek market.”
Greek 10-year yields slid 18 basis points to 6.87 percent and 30-year bonds yielded 6.70 percent, down 17 bps on the day. They resumed a downward trek that was interrupted last week as the bailout review talks looked set to drag on until the end of the month.
While junk-rated Greek bonds still offer higher yields than the rest of the eurozone, improved sentiment in peripheral euro zone debt has driven eurozone yields across the board to multi-year lows as concerns over the debt crisis have eased.
Volumes have also been picking up in a bond market that most investors deserted in 2010 when the debt crisis erupted. By March 11, investors had traded some 888 million euros of Greek government bonds – almost 60 percent of the total for the whole of 2013, Greek central bank data showed. This compares with 680 million in 2012, when Greek debt was restructured.
The improved market tone is also leading some Greek officials to consider issuing bonds earlier than the second half of the year Athens has hitherto flagged. [Reuters]