Low-yield market spurs rethink on Greek bonds


Some hedge funds are returning to the Greek government bond market less than a year after the country was bailed out for the third time, as the hunt for yield intensifies in a low-rate environment.

The debt-laden nation this week eased capital controls as it continues to make progress on bailout-mandated reforms.

This steady progress has been highlighted by some investors as a buying opportunity, particularly against the backdrop of negative yields in a large portion of the core eurozone sovereign market.

Even peripheral sovereign bonds are trading at record low yields.

“Greece is on a slow path to recovery. They have undertaken a lot of reforms, including on pensions, on tax collection and the new ambitious constitutional reform,” said Alberto Gallo, head of macro strategies at hedge fund Algebris, who recommends a Greece versus Portugal trade.

“They should also have pretty good tax revenues in the summer and we are looking at an inclusion in the ECB QE program by year-end,” he added.