Greek yields rise on refuted newspaper report

Greek government bond yields rose to a one-week high on Tuesday after a newspaper reported that the country’s European Union and International Monetary Fund lenders had interrupted their bailout review over a disagreement with Greek officials.

The government denied the report.

Greek 10-year bond yields rose as high as 6.80 percent, up 33 basis points on the day, and did not fully retreat after the denials.

They last traded 6.71 percent.

Greek bonds came under selling pressure in recent weeks as Athens said it wanted to end its bailout program early and stand on its own feet by using financial markets.

Investors see two risks.

The end of the bailout program also means the end of policy supervision, raising the prospect of Greece loosening its fiscal strings too much.

Also, if Athens starts to rely heavily on market funding, the share of privately held debt will grow.

That might make it more attractive for the government to impose losses on bondholders if Greece needs to restructure its debt again.

The newspaper report increased the market’s worries that Greece is determined to go it alone.

“Once Greece is out there on its own feet, it becomes more vulnerable and the risk of another restructuring increase,” said Gianluca Ziglio, an analyst at Sunrise Brokers.

Traders also cited uncertainty over the confidence vote and the risk of snap elections further down the line as putting pressure on Greek bonds.


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