Greek bond yields dip on bond swap announcement

Greek bond yields dip on bond swap announcement

Greece’s borrowing costs dipped on Wednesday after the country announced a debt swap plan that analysts said would be significant for the country’s bond market.

Greece on Wednesday invited private holders of about 30 billion euros in Greek debt to swap 20 small bonds for five new ones of longer maturity to boost its market liquidity before it emerges from bailouts in August 2018.

The country has been kept afloat with rescue funds since 2010 and is anxious to draw a line under financial upheaval next year and be able to service debt itself.

Two-year Greek bond yields were down 2.5 basis points at 2.91 percent, while 5-year bond yield were about 1.5 bps lower at 4.13 percent.

“This is very significant news for Greek government bonds because it means more liquidity for the market,” said DZ Bank rates strategist Sebastian Fellechner. “Greek bond spreads have already tightened in anticipation of this news.” [Reuters]

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