Greece’s benchmark 10-year government bond yields dropped to their lowest since 2006 on Monday after Moody’s raised its rating late last week, bolstering investor optimism towards the eurozone’s most indebted country.
Moody’s on Friday lifted Greece’s issuer ratings to B1 from B3, citing the effectiveness of the country’s reform program.
Greece’s 10-year yield dropped to 3.622 percent in early trade on Monday, the lowest since January 2006. A recently issued five-year bond’s yield fell to its lowest in its two-week trading history at 2.79 percent.
“The move from Moody’s is reflection that the reforms are already bearing fruit in the shape of some fiscal improvement with the primary surplus,” said DZ Bank strategist Daniel Lenz. “But I think what is also important is that Greece is showing it has access to markets, with the successful five-year (bond sale) and now rumors of a new 10-year as well,” he said.
The ratings upgrade fueled speculation that Greece would offer a new 10-year bond syndication this week, with Commerzbank analysts also saying they expect a deal this week.
Yields usually rise ahead of new supply, but for Greece, evidence of market access is considered positive, given the country’s massive debt-to-GDP ratio, of 176 percent.
Broader eurozone government bond yields were flat to slightly lower, though still near recent two-week highs on signs of a possible US-China trade deal. World equity markets were might be signed around a summit on March 27.
Germany’s 10-year yield, the benchmark for the eurozone, was marginally lower at 0.18 percent, down from a one-month high of 0.208 percent on Friday. [Reuters]