ECONOMY

Greek bond yields hit four-month low on name accord

greek-bond-yields-hit-four-month-low-on-name-accord

Greek 10-year borrowing costs dropped to a four-month low on Monday after the country’s parliament approved a deal last week that changes the name of neighboring Former Yugoslav Republic of Macedonia (FYROM), ending a 28-year row and thereby paving the way for a five-year bond sale.

Greece’s Parliament on Friday ratified an accord over the use of the term “Macedonia” that would see the  Balkan state renamed “Republic of North Macedonia,” unblocking after decades the ex-Yugoslav republic’s aspirations to join the European Union and NATO.

In addition to ending political uncertainty, sources told Reuters earlier this month the Greek debt agency planned to return to bond markets with a five-year syndicated issue once the dispute was resolved.

“In general, Greece has a strong liquidity buffer, but it is always good news if an issuer like Greece is able to enter the market,” said DZ Bank rates strategist Daniel Lenz. He was referring to the country’s last bailout agreement with the eurozone which means it is not under pressure to raise funds in the near future.

“Everybody is still concerned about the long term credibility of Greece, but a new deal now would show that it is on the right track for future development,” Lenz added.

The yield on 10-year Greek debt was down 1.5 basis points at 4.07 percent, its lowest since late September last year.

Tradeweb prices, meanwhile, showed that the country’s five-year bond was trading at a yield of 2.85 percent, close to a six-month low of 2.83 percent hit last week.

FYROM bonds also benefited from the news, though most of the reaction came on Friday, with a euro-denominated issue maturing July 2021 saw its yield hit a 4-1/2 month low of 1.54 percent. [Reuters]