Greek bonds continue post-election plunge

Greece’s bonds plunged for a second day as the nation’s newly named cabinet looked set to clash with euro-area finance ministers over its funding needs.

While finance chiefs from the 19-nation euro area on Monday signaled their willingness to do a deal with Greek Prime Minister Alexis Tsipras, it is on the condition he drops his demand for a debt writedown.

Representing the Greek side in negotiations with their international creditors will be Finance Minister Yanis Varoufakis, who has argued that Greece should default while staying a member of the euro area.

The bond declines were “mainly driven by the outcome of the election, the coalition and the prospect of tough negotiation be Greece and Europe,” said Patrick Jacq, a senior fixed-income strategist at BNP Paribas SA in Paris.

“The new finance minister has made relatively mixed comments depending on where he is speaking and to whom he is speaking to. I don’t think the worst-case scenario is the most likely.”

Greek three-year yields rose 198 basis points, or 1.98 percentage point, to 14.03 percent on Tuesday, after jumping 197 basis points on Monday.

The nation’s 10-year yield increased 38 basis points to 9.48 percent.