Greek Debt’s Record Winning Streak Leaves Europe Peers Trailing
Investors contrast Greek improvement with Italy: Commerzbank
Ratings agencies need bond buying evidence to upgrade: SocGenBy James Hirai and John Ainger
(Bloomberg) — Greece’s bonds are outpacing gains in euro-area debt, pushing benchmark yields close to a record low, in another sign of the nation’s recovery from the financial crisis.
The debt climbed for 14 consecutive days through Monday, the longest streak since Bloomberg started compiling data, to send 10-year yields hovering above a 3.206 percent low touched in 2005. Investor sentiment has improved as the government plans to repay part of its loan from the International Monetary Fund early and has built up a cash buffer of 26 billion euros ($29.4 billion).
Greece is still the euro-area’s most indebted nation and offers the region’s highest yields, attracting investor attention as a global bond rally this year has squashed returns elsewhere. The country’s growth and potential for rating upgrades is a turnaround following years of crisis and leaves markets concerned about debt in neighboring Italy instead.
“Greece is the top performer and could soon create more headlines when 10-year yields fall below the all-time low,” said analysts at Commerzbank AG including head of fixed-rate strategy Christoph Rieger. “With more investors contrasting the positive macro-, rating- and cash-flow situation in Greece with the deterioration in Italy, positive spread momentum may well extend.”
Greece’s 10-year yield edged up to 3.30 percent on Tuesday, having dropped 109 basis points this year, the most among developed nations according to datacompiled by Bloomberg. Its premium over Italian bonds has narrowed nearly 100 basis points this year, while the spread over Germany is at a 14-month low.