Markets showing Greek debt crisis fatigue

European bond markets are showing real signs of Greek debt-crisis fatigue.

Many investors frankly seem to be so exhausted by the debate about whether Greece will leave the eurozone that they’re now dismissing the possibility altogether.

How else can you explain why corporate-debt yields in countries like Portugal, Spain and Italy are so incredibly low, even as Greece fails to secure an agreement just days before the European Central Bank’s next decision on emergency aid?

“In credit, we think peripheral valuations are priced to perfection,” meaning that yields don’t reflect much of the downside risks, Bank of America Corp analysts Barnaby Martin, Ioannis Angelakis and Souheir Asba wrote in a May 1 report.

The debt has “a limited cushion should the Greek situation turn sour.”

Company bonds on the outskirts of the European Union offer almost the same extra yield over benchmarks as similar notes in core nations such as Germany, France and Belgium, according to Bank of America data.

And yet this debt is more vulnerable in a market rout because European central bankers aren’t buying corporate debt as part of their stimulus program.


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