Greek bonds have staged a dynamic recovery this week, taking their spread over Italian bonds into negative territory for the second time in a matter of weeks, per Tuesday’s rates.
This comes after Greece borrowed at negative rates in last week’s treasury bill auction, confirming that investor interest in Greek securities remains strong despite the usual wait-and-see stance of major portfolios in the year’s last month.
On Tuesday the yield on the benchmark 10-year Greek bond came to 1.35 percentage points, down 6 percent on top of Monday’s 9 percent decline. Therefore, from the level of 1.53 percentage points on Friday, the yield has slumped over 12 percent, making the 10-year Greek bond the eurozone’s top performer. That impressive performance has led the cost of borrowing for Greece back below that of Italy, whose 10-year bond yield was at 1.37 percentage points on Tuesday.
The five-year paper presented a similar picture, as its yield fell 22 percent to 0.527 percentage points, while the corresponding Italian rate closed at 0.545 percentage points.
Capital Economics analysts tell Kathimerini they expect the Greek bond rally to continue next year thanks to Greece’s positive prospects.