Greek bond yields soar on IMF bailout role worries


Greek government bond yields soared on Monday on worries about whether the International Monetary Fund will participate in the indebted southern European country’s bailout program.

Yields on short-dated bonds spiked 300 basis points for their biggest one-day jump since July 2015, while 10-year bond yields rose to their highest in almost three months.

Germany said on Monday it believed the IMF would participate and that it was too early to start thinking about other possible scenarios.

But concerns were heightened after a leaked report that the Fund expects Greek debt to explode to 275 percent of GDP by 2060, analysts said.

“There’s a bit of disquiet regarding the IMF’s role…” said Orlando Green, European fixed income strategist at Credit Agricole: “The bottom line is that the IMF wants debt relief for Greece and the EU has taken baby steps towards this, but it is not what the IMF is looking for long-term. When there are divisions between the EU and IMF, that arouses concerns about Greece.”

The IMF said around two years ago that it would take part in Greece’s aid package, a spokesman for Germany’s Finance Ministry said on Monday, adding, “Nothing has changed about that and it’s much too early to think about ‘what if?’”

He was answering a question about a report in the Bild newspaper that said Finance Minister Wolfgang Schaeuble would argue for a Greek exit from the eurozone should the IMF withdraw from the third bailout program.

Two-year government bond yields in Greece rose as far as 9.98 percent, their highest level in about seven months.

Five- and 10-year Greek bond yields also rose sharply, with 10-year yields climbing 50 bps to around 7.76 percent – their highest since early November.