Greek bond yields dip after rating boost

Greek bond yields edged lower on Monday after a credit rating upgrade from Standard & Poor’s, which said the country remained on track to emerge from a six-year recession.

The upgrade to B from B- late on Friday is a boost for Greece’s fragile coalition government, which is hoping to escape the constraints of its EU/IMF bailout program.

Greece is expected to hold negotiations with its lenders on further debt relief later this year, and Prime Minister Antonis Samaras told a weekend newspaper he is confident the country will not need a third bailout.

Greek 10-year bond yields dipped 3 basis points to 5.70 percent at Monday’s open, before paring some of those gains during the morning session.

“The upgrade was by-and-large expected, but it explains the slight outperformance this morning,” said Rainer Guntermann, a rates strategist at Commerzbank.

Fitch raised Greece’s rating to B in March and Moody’s upgraded it to Caa1 in August. In keeping with the broad trend of ratings upgrades for peripheral Europe, analysts are now predicting Moody’s will lift Slovenia’s rating when it reviews the country on Friday, pulling it up into investment grade.

Before then, markets are awaiting the US Federal Reserve’s meeting on Wednesday for hints of when it may raise interest rates in response to the country’s economic rebound. [Reuters]

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